Definitions

Question 1

investing decision

Answer 1

capital budgeting decision

Question 2

identification of investment opportunities

Answer 2

capital investment projects

Question 3

what kind of asset is brand recognition and acceptance?

Answer 3

intangible

Question 4

financing decision

Answer 4

the decision on how to raise money for investments in real assets

Question 5

capital structure decision

Answer 5

the choice to use debt or equity for long term financing

Question 6

short term investing decisions

Answer 6

how to invest spare cash for brief periods

Question 7

real assets

Answer 7

assets used to produce goods and services

Question 8

financial assets (securities)

Answer 8

claims to the income generate by real assets

Question 9

public corporation

Answer 9

shares traded on a exchange

Question 10

private corporation

Answer 10

shares are privately owned

Question 11

sole proprietorship

Answer 11

a business owned by 1 individual

Question 12

treasurer

Answer 12

looks after a firms cash, raises capital and as a relationship with the banks

Question 13

controller

Answer 13

budgeting, accounting and auditing

Question 14

CFO

Answer 14

oversees treasurer and controller and sets financial strategy

Question 15

agency problems

Answer 15

conflicts of interest between a firms owners and its managers

Question 16

what are 2 major decisions made by financial managers

Answer 16

this investment decision and the financing decision

Question 17

how do coorporations insure that managers and stockholders have the same goals

Answer 17

Compensation plans that give incentive for managers to increase value, threat of takeover, board of directors.

Question 18

financial market

Answer 18

a market in which securities are issued and traded.

Question 19

fixed-income market

Answer 19

market for debt securities

Question 20

capital market

Answer 20

long term financing

Question 21

money market

Answer 21

short term financing

Question 22

financial intermediary

Answer 22

raises money from investors to provide financing to individuals or corporations

Question 23

5 classes of financial intermediary

Answer 23

mutual funds, exchange traded funds, hede funds, private equity finds, pension funds

Question 24

mutual

Answer 24

managed fund pooling savings from many investors

Question 25

ETF

Answer 25

traded on a stock exchange, many investors pooled money together and replicated an established market index

Question 26

hedge fund

Answer 26

less regulated investment pool for wealth investors. higher risk

Question 27

cot of capital

Answer 27

minimum acceptable rate of return on capital

Question 28

IFRS

Answer 28

international financial reporting standards

Question 29

ASPE

Answer 29

accounting standards for private enterprise

Question 30

book value (carrying value)

Answer 30

value of all assets and liabilities shown on SFP (balance sheet)

Question 31

shareholders equity is also known as

Answer 31

total equity