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busfin420 exam1

business finance
the term used to describe the study of means by which a manager can determine long term investments to pursue, how to ay for those investments, and how to manage the daily finances
chief financial officer CFO
the top financial officer in a firm is commonly referred to as
treasurer
the person who is in charge of cash management and capital expenditures
capital budgeting
the process of managing a firms long term investments
capital structure
the amount of debt and equity used by a firm to finance its operations
working capital
a firm’s short term assets and short term liabilities
working capital management
the management of a firms cash, inventory, and payables
a sole proprietorship is defined as a bunsiness
that is owned by a single individual
partnership
a business org that is similar to a sole prop but has two or more owners
partnership agreements
the document which specifies how net profits and losses are to be divided among two or more individual owners who are personally liable for the firms debts
corporation
a business entity which is treated as a legal “person”
articles of incorporation
the legal papers which designate a firms name, nature of business, and intended life
bylaws
the rules which outline how a corp will regulate itself
a limited liability company (LLC)
cross between a partnership and a corporation
agency problem
any situation where a potential conflict can arise between the firm’s owners and managers
stakeholder
anyone other than the firms stockholders or creditors that might have a claim on the cash flows of a firm
the primary market refers to
the original sale of securities by the issuer
secondary market
the market for trading securities after the original sale
public offering
the sale of securities to the general public by the issuer
private placement
a negotiated sale of securities by an issuer to a specific buyer
dealer market
over the counter markets are ______ markets
auction market
a securities market with a physical location that is designed to match buyers with sellers
listed
when a company qualifies to have its securities traded on a particular exchange the stock of that company is said to be ________ w the exchange
what are the risks involved w owning a particular security?
financial topic of investments
bank and insurance company
are considered financial institutions
careers in finance include
ins agent, sec analyst, portfolio mang, corp treas I, II, III, IV
business finance addresses
which long term assets should a firm acquire
data processing
should be for the controller rather than the treasurer
correct concerning the organizational chart of a corp?
the tax manager generally reports to the controller rather than the treasurer
the purpose of capital budgeting is to
identify assets that produce caue in excess of their cost
related to capital budgeting
a firm should consider the size, risk, and timing of an assets cash flows before deciding to purchase that asset.
capital structure
when a firm decideds to borrow money rather than issue stock to raise funds for a new project, the company is making a __________ decision
the capital structure of a firm referes to the firms
long term debt and equity
working capital management includes
controlling the inventory level, determin when to pay suppliers, dec how much long term debt to assume I,II,III
the dialy financial operations of a firm are primarily controlled by managing the ________ of the firm
working capital
a sole proprietor
assumes personal liability for all of the debts of the business
the most widely used form of business entity in the US is
the sold proprietorship
under a general partnership
each partner receives only a proportionate share of the profits but is responsible for 100% of the partnerships debt
in a general partnership, each general partner is pernally liable for
the total debts of the partnership even if he or she was unaware that said debts were incurred
the advantage of being a limited partner in a lim partnership is the ability to
invest in a partnership while limiting your losses to the amount you invested
which one of the following statements about a limitied partnersship is correct?
a limited partner can sell his or her interest without the partnership dissolving
a corporation
may be considered a resident of an individual state
the bylawas of a corporation include info such as
method by which directors are elected
the primary advantages of a limited liability company are the
means of taxation and the limites on teh liabilities assumed by the owners
the general prupose of a limited liability company is to
be taxed like a partnership
the primary goal of financial managment is to maximize
market val of existing stock
matches the prim goal of financial management
increasing the market value of the firm while increases the long term debt
which one of the following situations is most apt to create an agency problem
a manager receives a bonus because he/she has hired to most new employees in teh past year
an agency problem frequently exists in situations where there is a seperation of
company ownership and company management
the control of a corporation ultimately lies with the
company stockholders
the Sarbanes-Oxlet Act was enacted
to help protect investors and others from financial malpractice
the Sarbanes-Oxlet Act
makes the officers of a public corp personally responsible for the firm’s financial statements
which of the following transactions accurs in teh primary market
POQ sells new shares of POQ to Frederico
If you purchase 100 shares of GE stock on teh NYSE today, the transaction is most likely occurring
in the secondary market
which one of the follwoiung statements is correct concerning the secondary markets?
secondary markets can be either dealer or auction markets
which of the following are char of a dealer market?
-buyers purchase securities for themselves at their own risk
-trans are done electronically w/o there being a physical location

I and IV

NASDAQ is
an over-the-counter market III only
all large company sotcks such as GE and Microsoft
can trade on the exchange of their choosing as long as the qualify for listing
which one of the following statements is correct concerning the financial markets in the US?
the NYSE lists significantly less companies than does NASDAQ
The financial markets in teh US
transact trades in both the primary and the secondary markets

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