Chapter 1 slides/vid

Question 1

What are the 4 different areas of finance?

Answer 1

1) Corporate Finance= Business Finance
2) Investments
3) Financial Institutions
4) International Finance

Question 2

Managers apart of a company who are required to make financial decisions such as long term investment decisions, long-term financing to pay for the investments, and how they manage the everyday financial activities is all done by which form of finance?

Answer 2

Corporate/Business Finance

Question 3

Facebook bought Instagram in 2012 for $1bn, and WhatsApp in 2014 for $19bn this is an example of what type of financial decision?

Answer 3

Long-term investments decision

Question 4

Apple plans to sell $5.5 billion in bonds and amid a broader debt-issuing boom among technology giants in 2020 this is an example of which financing activity?

Answer 4

Long-term financing to pay for investments

Question 5

Purchasing inventory is an example of which financing activity

Answer 5

Managing Every Day Financial Activities

Question 6

Which area of finance works with financial assets such as stocks and bonds. This area also values financial assets, risks versus return, and asset allocation

Answer 6

Investments

Question 7

Stockbroker or financial advisors
Portfolio Managers
Security Analyst are all examples of what type of job opportunities for which area of finance?

Answer 7

Investments

Question 8

Which area of finance is a special industry made of 3 different types of firms like Banks, insurance companies, and mortgage bankers?

Answer 8

Financial Institutions

Question 9

What are the 3 types of banks?

Answer 9

Commercial Banks
Investment Banks
Credit Unions

Question 10

Which type of banks are known for assisting private companies to go public i.e initial public offering. They also offer specialized advice to companies who engage in merger and acquisition transactions

Answer 10

Investment Banks

Question 11

The study of monetary interactions between two or more countries focusing on areas such as foreign direct investment and currency exchanged

Answer 11

International Finance

Question 12

What are the financial management decisions?

Answer 12

Capital Budgeting
Capital Structure

Question 13

What are the 3 forms of business organization?

Answer 13

Sole Proprietorship
Partnership
Corporation

Question 14

What are the two subforms of partnership?

Answer 14

General
Limited

Question 15

What are the two subforms of corporation?

Answer 15

C-Corp
Limited Liability Company

Question 16

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity is known as?

Answer 16

C-Corp

Question 17

T/F- Most of the large companies are recognized as a C-Corp

Answer 17

True

Question 18

Are C-Corps subject to double taxation?

Answer 18

Yes

Question 19

A limited liability company that offers protection to the owner from personal liability for any of the debts that a business incurs is known as

Answer 19

Limited Liability Company

Question 20

T/F- LLCs and S corporations are two terms discussed side by side

Answer 20

True

Question 21

Which type of classification is a tax classification

Answer 21

S Corporations

Question 22

What are the advantages of sole proprietorships?

Answer 22

• Easiest to start
• Least regulated
• Single owner keeps all of the profits
• Taxed once as personal income

Question 23

What are the disadvantages of sole proprietorships?

Answer 23

• Limited to life of owner
• Equity capital limited to owner’s personal wealth
• Unlimited liability
• Difficult to sell ownership interest

Question 24

What er the advantages of partnership?

Answer 24

• Two or more owners
• More capital available
• Relatively easy to start
• Income taxed once as personal income

Question 25

What are the disadvantages of partnership

Answer 25

• Unlimited liability
• General Partnership
• Limited Partnership
• Partnership dissolves when one partner dies or wishes to sell
• Difficult to transfer ownership

Question 26

A legal “person” distinct from owners and a resident state is known as

Answer 26

Corporation

Question 27

What are the advantages of corporation?

Answer 27

• Limited liability
• Unlimited life
  Separation of ownership and management
• Transfer of ownership’s easy
• Easier to raise capital

Question 28

What are the disadvantages of corporation?

Answer 28

• Separation of ownership and management (agency problem)
• Double taxation (income taxed at the corporate rate and then dividends taxed at personal rate, while dividends paid are not tax reductions

Question 29

What are the goals of financial management?

Answer 29

• Maximize the market value of the existing owners’ equity

Question 30

The value of a publicly owned corporation is measured by its *** the share price of its stock

Answer 30

Marketcap

Question 31

This is a market where companies first sell their securities and where they are created. This market sells new stocks and bonds to the public for the first time

Answer 31

Primary Market

Question 32

Which type of market is where investors buy and sell securities they already own. Typically known as the stock market

Answer 32

Secondary Market

Question 33

A business owned by one person is known as

Answer 33

Sole Proprietorship

Question 34

A business owned by two or more persons is known as

Answer 34

Partnership

Question 35

What act was driven by corporate scandals intended to strengthen protection against accounting fraud and financial malpractice?

Answer 35

Sarbanes-Oxley Act also known as SarBox 2002