Chapter 17

Question 1

Capital Structure

Answer 1

mix of a company’s debt and equity capital.

Question 2

Finance

Answer 2

planning, obtaining, and managing a company’s funds to accomplish its objectives as effectively and efficiently as possible.

Question 3

Financial Managers

Answer 3

executives who develop and implement the firm’s financial plan and determine the most appropriate sources and uses of funds.

Question 4

Financial Plan

Answer 4

document that specifies the funds needed by a company for a period of time, the timing of inflows and outflows, and the most appropriate sources and uses of funds.

Question 5

Leverage

Answer 5

increasing the rate of return on funds invested by borrowing funds.

Question 6

Risk-Return Trade-Off

Answer 6

process of maximizing the wealth of a firm’s shareholders by striking the optimal balance between risk and return.

Question 7

Venture Capitalists

Answer 7

business firms or groups of individuals that invest in new and growing firms in exchange for an ownership share.