FIN 300 Exam 1 "Study Guide" Tsarsis || Faultless Answers 100%.
Role of Financial Manager correct answers Make decisions on behalf of the firm's investors
For good decisions, the benefits exceed the costs
Stakeholder Theory correct answers A theory that holds that social responsibility is paying
attention to the interest of every affected stakeholder in every aspect of a firm's operation
Capital Budgeting correct answers the process of analyzing the needs of the business and
selecting the assets that will maximize its value
Financing decision/Capital structure decision correct answers How will the company obtain
investment capital to obtain its productive assets?
Financing Decision correct answers How a firm builds the liability and equity side of the balance
sheet to finance its investments. Whether the firm chooses to finance (pay) for its assets through
using debt, or issuing equity.
equity correct answers ownership of assets that may have debts or other liabilities attached to
them
Goal of the firm correct answers maximize profit
Agency Conflict correct answers the possibility of conflict of interest between the stockholders
and management of a firm
Agency Relationship correct answers relationship between stockholders and management
Alignment of goals of shareholders to managers correct answers
, Sarbanes-Oxley Act (SOX) correct answers Regulations passed by Congress to reduce unethical
corporate behavior.
FED correct answers the Federal Reserve System (the nation's central banking organization)
FED goals correct answers 1) Maximum Employment
2) Price Stability
3) Financial Market Stability
FED tools correct answers open market operations, discount rate, reserve requirement
open market operations correct answers the buying and selling of government securities to
change the supply of money
discount rate correct answers rate the Federal Reserve charges for loans to commercial banks
Reserve Requirements (RR) correct answers - affect how much money banks can create by
making loans
- the fraction of deposits banks must hold in the vault or on deposit at the FED
Financial Markets correct answers markets where financial securities, such as stocks and bonds,
are bought and sold
Primary markets versus secondary markets correct answers -Primary markets are the markets in
which corporations raise new capital. The corporation selling a newly created stock receives the
proceeds from the sale in a primary market transaction (Business/Gov to Investor)
Role of Financial Manager correct answers Make decisions on behalf of the firm's investors
For good decisions, the benefits exceed the costs
Stakeholder Theory correct answers A theory that holds that social responsibility is paying
attention to the interest of every affected stakeholder in every aspect of a firm's operation
Capital Budgeting correct answers the process of analyzing the needs of the business and
selecting the assets that will maximize its value
Financing decision/Capital structure decision correct answers How will the company obtain
investment capital to obtain its productive assets?
Financing Decision correct answers How a firm builds the liability and equity side of the balance
sheet to finance its investments. Whether the firm chooses to finance (pay) for its assets through
using debt, or issuing equity.
equity correct answers ownership of assets that may have debts or other liabilities attached to
them
Goal of the firm correct answers maximize profit
Agency Conflict correct answers the possibility of conflict of interest between the stockholders
and management of a firm
Agency Relationship correct answers relationship between stockholders and management
Alignment of goals of shareholders to managers correct answers
, Sarbanes-Oxley Act (SOX) correct answers Regulations passed by Congress to reduce unethical
corporate behavior.
FED correct answers the Federal Reserve System (the nation's central banking organization)
FED goals correct answers 1) Maximum Employment
2) Price Stability
3) Financial Market Stability
FED tools correct answers open market operations, discount rate, reserve requirement
open market operations correct answers the buying and selling of government securities to
change the supply of money
discount rate correct answers rate the Federal Reserve charges for loans to commercial banks
Reserve Requirements (RR) correct answers - affect how much money banks can create by
making loans
- the fraction of deposits banks must hold in the vault or on deposit at the FED
Financial Markets correct answers markets where financial securities, such as stocks and bonds,
are bought and sold
Primary markets versus secondary markets correct answers -Primary markets are the markets in
which corporations raise new capital. The corporation selling a newly created stock receives the
proceeds from the sale in a primary market transaction (Business/Gov to Investor)
