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ASU FIN 300 EXAM 1 (CH 1-4) 2026
QUESTIONS AND ANSWERS | A+
GRADED | WITH EXPERT SOLUTIONS
1.Three areas of finance: - correct answer- *Financial
Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - correct answer-the long-term tangible and
intangible *assets* a firm uses *to generate cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
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when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize -
correct answer-the *value of the owner's stock*
which helps maximize the *owner's wealth* (the economic value
of the assets the owners possesses)
Stakeholder - correct answer-anyone other than the owner
(stockholder) with a claim on the cash flows of a firm (employees,
customers, creditors, suppliers, the government)
3 fundamental decisions in financial management - correct
answer-a. *Capital budgeting*- which productive assets to buy
b. *Financing decisions*- raising money to buy more p assets,
mainly through selling long term *debt and equity*
c. *Working capital* decisions- involve how firms *manage their
current assets and liabilities*. Enough money to *pay the bills*
and any money left over is invested to earn a return
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Capital Budgeting - correct answer-*which productive assets* the
firm *should purchase* and how much money the firm can afford
to spend
*long term assets* on balance sheets/investments/ productive
assets both tangible and intangible
Financing decisions - correct answer-how firms raise cash to pay
for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity
investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make
interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
Working capital management decisions - correct answer-how to
manage the firm's *current assets and current liabilities*
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*day to day* management of short term asserts and liabilities
-mismanagement cause firm to go into debt/*bankruptcy*
-*profitability affected*
Capital structure - correct answer-the mix of debt and equity that
is used to finance a firm
Net working capital - correct answer-the dollar difference between
total current assets and total current liabilities
Capital Markets - correct answer-financial markets where equity
and debt instruments with maturities greater than one year are
traded
Residual Cash Flow - correct answer-cash remaining after a firm
has paid operating expenses and what it owes creditors and
taxes, can be distributed to owners as cash dividend or by
repurchasing shares or reinvested into business
ASU FIN 300 EXAM 1 (CH 1-4) 2026
QUESTIONS AND ANSWERS | A+
GRADED | WITH EXPERT SOLUTIONS
1.Three areas of finance: - correct answer- *Financial
Management*
-buying/selling of assets
-financing choices
-control costs
2. *Investments*
-purchasing and holding assets & securities
-stocks and bonds
3. *Financial Markets*
-capital markets
-money markets
-financial intermediaries (banks or credit unions)
Productive assets - correct answer-the long-term tangible and
intangible *assets* a firm uses *to generate cash flows*
Tangible = equipment etc.
intangible = patents, trademarks, technical experience
, Page | 2
when purchase productive assets = *capital budgeting*
Financial Managers should make decisions that maximize -
correct answer-the *value of the owner's stock*
which helps maximize the *owner's wealth* (the economic value
of the assets the owners possesses)
Stakeholder - correct answer-anyone other than the owner
(stockholder) with a claim on the cash flows of a firm (employees,
customers, creditors, suppliers, the government)
3 fundamental decisions in financial management - correct
answer-a. *Capital budgeting*- which productive assets to buy
b. *Financing decisions*- raising money to buy more p assets,
mainly through selling long term *debt and equity*
c. *Working capital* decisions- involve how firms *manage their
current assets and liabilities*. Enough money to *pay the bills*
and any money left over is invested to earn a return
, Page | 3
Capital Budgeting - correct answer-*which productive assets* the
firm *should purchase* and how much money the firm can afford
to spend
*long term assets* on balance sheets/investments/ productive
assets both tangible and intangible
Financing decisions - correct answer-how firms raise cash to pay
for their iterm-55nvestments
ex: productive assets financed by long term borrowing or equity
investment
debt financing - advantage=tax deductable
but increase firms risk because contractual obligation to make
interest payments
equity- has no maturity/guarantee of payments.
*long term liability (debt) and equity*
Working capital management decisions - correct answer-how to
manage the firm's *current assets and current liabilities*
, Page | 4
*day to day* management of short term asserts and liabilities
-mismanagement cause firm to go into debt/*bankruptcy*
-*profitability affected*
Capital structure - correct answer-the mix of debt and equity that
is used to finance a firm
Net working capital - correct answer-the dollar difference between
total current assets and total current liabilities
Capital Markets - correct answer-financial markets where equity
and debt instruments with maturities greater than one year are
traded
Residual Cash Flow - correct answer-cash remaining after a firm
has paid operating expenses and what it owes creditors and
taxes, can be distributed to owners as cash dividend or by
repurchasing shares or reinvested into business
