A. Direction: Read the statements carefully. Write TRUE if the statement is correct. Otherwise, write FALSE. 1. Financial Management, also called corporate finance, focuses on decisions relating to how much and what types of assets to acquire, how to raise the capital needed to purchase assets, and how to run the firm to maximize its value.
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- Which of the following statement is true about financial managers? 1. The principal goal of a financial manager is to maximize the wealth of the stockholders II. It is generally not the duty of financial managers to ensure that a firm has the cash it needs for day-to-day transactions III. In general, financial managers make financial decisions in a corporation, rather than the shareholders making these decisions themselves IV. It is generally not the duty of financial managers to make decisions on how projects will be financed O I and III only O I only OI, III, and IV only O I and II only W(ESSAY) 1. Explain the importance of Finance in business. 2. Why is shareholder wealth maximization be the overriding objective of management?In corporate finance, the financing and investment decisions are related to questions concerning: how to generate profits and expand operations. how to reduce costs and survive. how to acquire and employ or invest funds. all of the given options.
- What is the important question of corporate finance when a finance manager advises the company’s management to accept or reject a long-term investment project? What the finance manager needs to analyse to justify her/his adviceHow a corporation is different from a partnership in terms of owner, legal status, liabilities, life, regulation, access to capital, taxation and transfer?In the real world, what are the main challenges that a Finance Manager faces while tryingto run a business entity? Elaborate on the same.a. Discuss the factors that are likely to influence the desired level of cash of a company b. Outline the advantages and disadvantages of using short term debt, as opposed to longterm debt, in the financing of working capitalc. Why cash flows rather than profits are most desirable in financial management? d. Explain the term “agency relationships” and discuss the conflicts that might exist in therelationship between’i) Shareholder and managersii) Shareholders and creditorsWhat steps may be taken to overcome these conflicts?
- Select all that is true about the role of financial managers and the types of financial decisions they make. Select one or more: a. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets. b. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm. c. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake. Od. Size and timing of cash flows is unimportant in a capital budgeting decision. e. Capital Budgeting function involves planning and determining the firm's short term investments. Of. Determining the appropriate level of inventory is a working capital management function. ZA do W X LThe investment banks collect money from public, because O a. Business sells products. O b. Business issues shares and debentures. O C. Business wants to make profits. O d. Banks issue shares and debentures.TOPIC: Introduction to Financial Management 1. Which of the following can be accepted as main points to note when it comes to a company's financial objective? O It is generally accepted that the main financial objective of a company should be to maximize (or at least increase) shareholder wealth. O There are practical difficulties in selecting a suitable measurement for growth in shareholder wealth. Financial targets such as profit maximization and growth in EPS might be used, but no financial target on its own is ideal. O Financial performance is therefore assessed in a variety of ways: by the actual or expected increase in the share price, growth in profits, growth in EPS, and so on. 2. Which of the following statement/s depicts agency relationships and conflicts? I. The owners expect the agents to act in the best interests of the owners. Ideally, the 'contract' between the owners and the managers should ensure that the managers always act in the best interests of the…
- Which function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings? Select one: a. Administration of the payments mechanism b. Information production services. c. Money supply management. d. Asset transformation services. e. Brokerage services.Which one of the following statements is TRUE? a. Creditors have a claim on a firm's earning stream through the dividend payments they receive. b. One tool of corporate governance is a company's tax avoidance strategy. c. One tool of corporate governance is stock repurchases. d. One tool of corporate governance is how the company's charter affects the likelihood of a takeover. e. One tool of corporate governance is choosing a good investment banker.We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?