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23 Cards in this Set
- Front
- Back
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The objective of a corporation is to... |
maximize shareholder value |
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In a limited partnership, the general partner has... |
unlimited liability |
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A stock exchange is an example of a... |
Secondary market venue... While investment banks facilitate the issuance of stock in the primary market. |
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Agency costs |
A cost that arises from, or must be paid to, an agent acting on behalf of a principle. Arises from conflicts of interest between shareholders and market. |
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Shareholder value is defined as... |
# of shares X price |
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Fixed salaries help reduce agency costs (T/F) |
False |
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Issuing long term debt to pay off accounts payable is called a... |
Capital structure or Financing decision |
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Agency costs are greater in a corporation than in a sole proprietorship (T/F) |
True |
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The decision to buy a forklift is called a... |
Capital budgeting or investment decision |
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Investment decisions |
decisions to spend money |
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Financing decisions |
decision to raise money |
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Real assets |
-assets used to produce and sell goods and services (tangible and intangible) -investment decision |
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investment is also called... |
capital budgeting or capital expenditure |
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Financial assets |
financial claims to the income generated by the firms real assets |
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apple decides to spend 500 million to develop a new iPhone (financing or investing?) |
Investing |
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GE borrows 400 million from bond investors (financing or investing?) |
Financing |
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Microsoft issues 100 million shares to buy a small technology company. (financing and investing?) |
Both |
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Real or financial asset? -A patent -A share of stock -A band saw -A mortgage for a home -An advertising campaign -An i-ow-u to your brother in law
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-Real -Financial -Real -Financial -Real -Financial |
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Financial Manager |
refers to anyone responsible for an investment or financing decision |
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Treasurer |
responsible for cash management, raising capital, and banking relationships |
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Controller |
Accountant |
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hurdle rate/opportunity cost of capital |
minimum acceptable rate of return on investment |
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legal and regulatory requirements |
SEC |
