Ch.1 FIN 351 - Quick Quiz What are the four basic areas of...

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Unformatted text preview: Quick Quiz What are the four basic areas of finance? ( Slide 1.4) What are the three types of financial management decisions, and what questions are they designed to answer? (Slide 1.13) What are the three major forms of business organization? (Slide 1.14) What is the goal of financial management? ( Slide 1.19) What are agency problems, and why do they exist within a corporation? (Slide 1.22) 1-1 Basic Areas Of Finance 1. 2. 3. 4. Corporate finance = Business Finance Investments Financial institutions International finance Return to Quick Quiz 1-2 Capital budgeting Capital structure Financial Management Decisions What long-term investments or projects should the business take on? How should we pay for our assets? Should we use debt or equity? Working capital management How do we manage the day-to-day finances of the firm? Return to Quick Quiz 1-3 Forms of Business Organization Three major forms in the United States Sole proprietorship Partnership General Limited Corporation S-Corp Limited liability company Return to Quick Quiz 1-4 Goal Of Financial Management What should be the goal of a corporation? Maximize profit? Minimize costs? Maximize market share? Maximize the current value per share of the company's existing stock Maximize the market value of the existing owners' equity Return to Quick Quiz 1-5 The Agency Problem Agency relationship Principal hires an agent to represent its interests Stockholders (principals) hire managers (agents) to run the company Agency problem Conflict of interest between principal and agent Management goals and agency costs Return to Quick Quiz 1-6 ...
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Ch.1 FIN 351 - Quick Quiz What are the four basic areas of...

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