CHAPTER ONE- THE SCOPE OF CORPORATE FINANCE ACTUAL
EXAM/ MOSTLY TESTED QUESTIONS AND CORRECT DETAILED
ANSWERS| 100% CORRECT SOLUTIONS/GRADE A+
Corporate Finance
Ans: The practice of managing the money that flows in and out of a business
Financial Function
Ans: Raising capital to support a company's operations and investment programs
Financial Management Function
Ans: Managing firms' internal cash flows and its mix of debt and equity financing, both to maximize the
value of the debt and equity claims on firms' and to ensure that companies can pay off their obligations
when they come due.
Capital Budget Function
, Ans: Selecting the best projects in which to invest the firm's resources based on each projects
perceived risk and expected return
Risk Management
Ans: Managing the firm's exposure to risk in order to maintain the optimal risk-return trade-off and
therefore maximize shareholder value
Corporate Governance Function
Ans: Developing ownership and corporate governance structures for companies that ensure that
managers behave ethically and make decisions that benefit shareholders.
Equity
Ans: an ownership share in a corporation
Debt
Ans: money borrowed and not yet paid back
Venture capitalists
Ans: Professional investors who manage investment capital that typically invests in very young new
ventures.
Initial Public Offering (IPO)
EXAM/ MOSTLY TESTED QUESTIONS AND CORRECT DETAILED
ANSWERS| 100% CORRECT SOLUTIONS/GRADE A+
Corporate Finance
Ans: The practice of managing the money that flows in and out of a business
Financial Function
Ans: Raising capital to support a company's operations and investment programs
Financial Management Function
Ans: Managing firms' internal cash flows and its mix of debt and equity financing, both to maximize the
value of the debt and equity claims on firms' and to ensure that companies can pay off their obligations
when they come due.
Capital Budget Function
, Ans: Selecting the best projects in which to invest the firm's resources based on each projects
perceived risk and expected return
Risk Management
Ans: Managing the firm's exposure to risk in order to maintain the optimal risk-return trade-off and
therefore maximize shareholder value
Corporate Governance Function
Ans: Developing ownership and corporate governance structures for companies that ensure that
managers behave ethically and make decisions that benefit shareholders.
Equity
Ans: an ownership share in a corporation
Debt
Ans: money borrowed and not yet paid back
Venture capitalists
Ans: Professional investors who manage investment capital that typically invests in very young new
ventures.
Initial Public Offering (IPO)
