busfin420 exam1 – Flashcards
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business finance
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the term used to describe the study of means by which a manager can determine long term investments to pursue, how to ay for those investments, and how to manage the daily finances
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chief financial officer CFO
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the top financial officer in a firm is commonly referred to as
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treasurer
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the person who is in charge of cash management and capital expenditures
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capital budgeting
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the process of managing a firms long term investments
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capital structure
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the amount of debt and equity used by a firm to finance its operations
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working capital
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a firm's short term assets and short term liabilities
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working capital management
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the management of a firms cash, inventory, and payables
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a sole proprietorship is defined as a bunsiness
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that is owned by a single individual
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partnership
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a business org that is similar to a sole prop but has two or more owners
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partnership agreements
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the document which specifies how net profits and losses are to be divided among two or more individual owners who are personally liable for the firms debts
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corporation
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a business entity which is treated as a legal "person"
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articles of incorporation
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the legal papers which designate a firms name, nature of business, and intended life
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bylaws
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the rules which outline how a corp will regulate itself
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a limited liability company (LLC)
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cross between a partnership and a corporation
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agency problem
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any situation where a potential conflict can arise between the firm's owners and managers
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stakeholder
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anyone other than the firms stockholders or creditors that might have a claim on the cash flows of a firm
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the primary market refers to
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the original sale of securities by the issuer
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secondary market
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the market for trading securities after the original sale
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public offering
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the sale of securities to the general public by the issuer
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private placement
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a negotiated sale of securities by an issuer to a specific buyer
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dealer market
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over the counter markets are ______ markets
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auction market
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a securities market with a physical location that is designed to match buyers with sellers
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listed
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when a company qualifies to have its securities traded on a particular exchange the stock of that company is said to be ________ w the exchange
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what are the risks involved w owning a particular security?
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financial topic of investments
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bank and insurance company
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are considered financial institutions
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careers in finance include
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ins agent, sec analyst, portfolio mang, corp treas I, II, III, IV
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business finance addresses
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which long term assets should a firm acquire
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data processing
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should be for the controller rather than the treasurer
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correct concerning the organizational chart of a corp?
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the tax manager generally reports to the controller rather than the treasurer
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the purpose of capital budgeting is to
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identify assets that produce caue in excess of their cost
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related to capital budgeting
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a firm should consider the size, risk, and timing of an assets cash flows before deciding to purchase that asset.
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capital structure
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when a firm decideds to borrow money rather than issue stock to raise funds for a new project, the company is making a __________ decision
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the capital structure of a firm referes to the firms
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long term debt and equity
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working capital management includes
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controlling the inventory level, determin when to pay suppliers, dec how much long term debt to assume I,II,III
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the dialy financial operations of a firm are primarily controlled by managing the ________ of the firm
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working capital
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a sole proprietor
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assumes personal liability for all of the debts of the business
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the most widely used form of business entity in the US is
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the sold proprietorship
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under a general partnership
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each partner receives only a proportionate share of the profits but is responsible for 100% of the partnerships debt
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in a general partnership, each general partner is pernally liable for
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the total debts of the partnership even if he or she was unaware that said debts were incurred
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the advantage of being a limited partner in a lim partnership is the ability to
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invest in a partnership while limiting your losses to the amount you invested
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which one of the following statements about a limitied partnersship is correct?
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a limited partner can sell his or her interest without the partnership dissolving
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a corporation
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may be considered a resident of an individual state
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the bylawas of a corporation include info such as
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method by which directors are elected
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the primary advantages of a limited liability company are the
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means of taxation and the limites on teh liabilities assumed by the owners
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the general prupose of a limited liability company is to
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be taxed like a partnership
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the primary goal of financial managment is to maximize
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market val of existing stock
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matches the prim goal of financial management
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increasing the market value of the firm while increases the long term debt
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which one of the following situations is most apt to create an agency problem
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a manager receives a bonus because he/she has hired to most new employees in teh past year
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an agency problem frequently exists in situations where there is a seperation of
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company ownership and company management
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the control of a corporation ultimately lies with the
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company stockholders
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the Sarbanes-Oxlet Act was enacted
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to help protect investors and others from financial malpractice
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the Sarbanes-Oxlet Act
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makes the officers of a public corp personally responsible for the firm's financial statements
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which of the following transactions accurs in teh primary market
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POQ sells new shares of POQ to Frederico
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If you purchase 100 shares of GE stock on teh NYSE today, the transaction is most likely occurring
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in the secondary market
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which one of the follwoiung statements is correct concerning the secondary markets?
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secondary markets can be either dealer or auction markets
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which of the following are char of a dealer market?
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-buyers purchase securities for themselves at their own risk -trans are done electronically w/o there being a physical location I and IV
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NASDAQ is
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an over-the-counter market III only
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all large company sotcks such as GE and Microsoft
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can trade on the exchange of their choosing as long as the qualify for listing
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which one of the following statements is correct concerning the financial markets in the US?
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the NYSE lists significantly less companies than does NASDAQ
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The financial markets in teh US
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transact trades in both the primary and the secondary markets
