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Corporate Finance Ch.1 The Goals & Functions of Financial Management

Finance is about making decisions that focus on creating ____ within the firm.
Finance builds upon the disciplines of economics and ?
Economics provides theories about economic system and ?
Decision Making
What long term investments or projects the firm should undertake is what kind of decision?
Capital Budget Decision
How the firm should pay for these assets, issuing equity or debt are what kinda decisions?
Capital Structure Decision
How much cash or inventory the firms hold carry is what kind of decision?
Working Capital Management Decision
The decisions made are within what kind of framework?
The primary goal of financial management is what?
Maximize shareholder wealth
What should these goals be measured by?
Share Price
The goal of maximizing shareholder wealth may conflict with?
interests of management (their compensation) and social/ethical goals
This theory is about the potential conflict between shareholders and managers.
Agency Theory
The goal of shareholder wealth maximization can be consistent with a concern for?
Social Responsibility
Finance functions include:
corporate finance, banking, securities, money management, financial planning
This is when there is one owner, largest in actual number but smallest in total sales revenue
Sole Proprietorship
This is when there are two or more owners.
Legal entity unto itself, smallest in actual number but largest in total sales revenue.
This type of market are those markets for governments to borrow funds for public activities.
Public Financial Markets
These markets are those for corporations to raise funds.
Corporate Financial Markets
These markets deal in short term securities. Less than one year.
Money Markets
These markets deal in long term securities.
Capital Markets
This market is where a firm issues new bonds or shares.
Primary Market
These markets are where investors buy and sell outstanding bonds or shares
Secondary Market
These are representations of ownership or equity in the company
Stock (Share)

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