AFM - Exam 1 Study Guide ACTUAL
QUESTIONS AND CORRECT ANSWERS
What is financial management - CORRECT ANSWERS✅✅Financial Management is the
process of maintaining and/or creating economic value or wealth.
What is agricultural financial management? - CORRECT ANSWERS✅✅Agricultural
Financial Management is the process of maintaining and or creating economic value or
wealth for an agribusiness firm.
What is the goal of the firm? - CORRECT ANSWERS✅✅The goal of the firm is to
maximize the owner's wealth.
What are the three circles of the goals pie chart? - CORRECT ANSWERS✅✅Profits,
liquidity, and risk management.
What are the three examples of how you can achieve the goal of the firm? - CORRECT
ANSWERS✅✅Profit maximization, maintaining liquidity, and risk management.
In what ways do we manage risk? - CORRECT ANSWERS✅✅The process of mitigating
the negative impact of risk and
uncertainty AND understanding the likelihood of success or failure.
What are the four ways of managing risk? - CORRECT ANSWERS✅✅1. Reduce risk
2. Shift risk
3. Self-insure against
4. Retain risk
The three key concepts qualifying likelihood are? - CORRECT ANSWERS✅✅Expected
value, standard deviation, and coefficient of variation.
What are the 5 steps involved in creating the process of risk management? - CORRECT
ANSWERS✅✅1. Actions
, 2. Events
3. Payoffs/regrets
4. Probability
5. Criteria
What is strategic management? - CORRECT ANSWERS✅✅Strategic management means
charting the course of the business
over the long term.
What is the 1st characteristic of a strategic manager? - CORRECT
ANSWERS✅✅Anticipates and adapts their markets.
What is the 2nd characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is a
strategic thinker.
What is the 3rd characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is
opportunistic and always attempting to push the envelope.
What is the 4th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Sets
priorities and follows through.
What is the 5th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is more
likely to seek input from outside.
What is the 6th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Spends
time monitoring performance.
What is the 7th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Sees
themselves as a coach.
What is the 8th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Focuses
on the business's future.
QUESTIONS AND CORRECT ANSWERS
What is financial management - CORRECT ANSWERS✅✅Financial Management is the
process of maintaining and/or creating economic value or wealth.
What is agricultural financial management? - CORRECT ANSWERS✅✅Agricultural
Financial Management is the process of maintaining and or creating economic value or
wealth for an agribusiness firm.
What is the goal of the firm? - CORRECT ANSWERS✅✅The goal of the firm is to
maximize the owner's wealth.
What are the three circles of the goals pie chart? - CORRECT ANSWERS✅✅Profits,
liquidity, and risk management.
What are the three examples of how you can achieve the goal of the firm? - CORRECT
ANSWERS✅✅Profit maximization, maintaining liquidity, and risk management.
In what ways do we manage risk? - CORRECT ANSWERS✅✅The process of mitigating
the negative impact of risk and
uncertainty AND understanding the likelihood of success or failure.
What are the four ways of managing risk? - CORRECT ANSWERS✅✅1. Reduce risk
2. Shift risk
3. Self-insure against
4. Retain risk
The three key concepts qualifying likelihood are? - CORRECT ANSWERS✅✅Expected
value, standard deviation, and coefficient of variation.
What are the 5 steps involved in creating the process of risk management? - CORRECT
ANSWERS✅✅1. Actions
, 2. Events
3. Payoffs/regrets
4. Probability
5. Criteria
What is strategic management? - CORRECT ANSWERS✅✅Strategic management means
charting the course of the business
over the long term.
What is the 1st characteristic of a strategic manager? - CORRECT
ANSWERS✅✅Anticipates and adapts their markets.
What is the 2nd characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is a
strategic thinker.
What is the 3rd characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is
opportunistic and always attempting to push the envelope.
What is the 4th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Sets
priorities and follows through.
What is the 5th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Is more
likely to seek input from outside.
What is the 6th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Spends
time monitoring performance.
What is the 7th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Sees
themselves as a coach.
What is the 8th characteristic of a strategic manager? - CORRECT ANSWERS✅✅Focuses
on the business's future.
