C708 V4 Quizzes Unit 2-Module 1: An Introduction to Finance, Module 2: Relating Finance to Business, Module 3: The Financial Market Environment (Macro-level), and PA by Unit with COMPLETE SOLUTION

C708 V4 Quizzes Unit 2-Module 1: An Introduction to Finance, Module 2: Relating Finance to Business, Module 3: The Financial Market Environment (Macro-level), and PA by Unit with COMPLETE SOLUTION Time - Which concept describes the underlying driver behind all finance? The study of fund management and asset allocation over time Fund management and asset allocation encompass the entire function of finance - Which answer gives a definition of finance? Accounting is backwards looking, finance projects forward, and economics studies cause and effect. Accounting reflects decisions that are already made; finance looks at the impact of decisions to be made; economics seeks to explain how business decisions are made - Which answer best summarizes how the fields of accounting, finance, and economics relate to each other To maximize short-term profit Finance focuses on cash flow and not profit. - Which answer does not represent how finance is used in organizations? Whether you can accurately calculate the guaranteed return on the investment Nothing is guaranteed in finance. Uncertainty is an essential factor in finance - Which factor is not something a corporation must consider when making an investment decision? A sole proprietorship does not elect board members. The owner is personally liable for the business's debt and obligations There is only one owner.There is no separation between the taxes of the sole proprietorship and the taxes of the owner. Instead, all business profits are treated as the income of the owner. - Which answer is a characteristic of a sole proprietorship There must be at least two business owners. A partnership is an arrangement by which two or more persons agree to share in all assets, profits, and financial and legal liabilities of a business - Which answer is a legal characteristic of a general partnership? Shareholders are generally not personally liable for the business's obligations and liabilities. The corporation must have an elected board of directors. The corporation is a separate taxable entity from its owners Being a separate taxable entity from its owners, having an elected board of directors, and shareholders that are generally not personally liable for the business's obligations and liabilities are all characteristics of a corporation - Which answer best describes a characteristic of a corporation Shareholders are only paid if the company makes a profit, bondholders are paid regardless. Shareholders generally want the company to pursue riskier projects; bondholders do not. Shareholders have a vote in how the company conducts its business; bondholders generally do not. All of these answers are factors that contribute to the conflict of interest between a company's bondholders and its shareholders. - Which answer is a factor that contributes to the conflict of interest between a company's bondholders and its shareholders? Valuation is a forward-looking process, so historical data is unimportant. The valuation process considers such historical data from financial statements - Which answer is not a true statement regarding the valuation process?Capital markets, money markets, and derivative markets are all types of financial markets - Which answer best describes a type of financial market? Capital market Capital markets are used to finance long-term projects. - A company needs funds to expand its business by purchasing new equipment. Which financial market should the compan