Long-Term Investment – Finance Hw

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Determining the best way to raise money to fund a firms long-term investment is called      
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Long-Term Investment – Finance Hw

The key terms of Finance Hw include, Long-term Investment.


Determining the best way to raise money to fund a firms long-term investment is called      

the capital structure decisions


The best form of business entity to attract new capital is the sole proprietorship because investors only need to deal with one owner      

False


S-type corporations and limited liability companies are taxed like partnerships, but have the advantage of limited liability for their owners       

True

If we invest money for 10 years at 8% interest, compounded semi-annually, we are really investing money for 20 six-month periods, and receiving 4% interest each period 

True


For a given stated interest rate, an investor would receive a greater future value with daily compounding as opposed monthly compunding 

True


The five basic principles of finance include all of the following except:   

Incremental profits determine value(included in basic principles: risk requires a reward, cash flow is what matters, money has a time value)


To measure vale, the concept of time value of money is used  

To bring the future benefits and cost of a project, measure by its cash flows, back to the present


All of the following contributed to recent financial crises except:      

relying on the efficiency of financial markets


Executive compensation in the U.S      

is dominated by performance-based compensation designed to reduce agency problems


The recent financial crises was exacerbated by 

managers who underestimated the real risks of their decisions and borrowed excessively


Financial management deals with the maintenance and creation of economic value or wealth 

True


The fundamental goal of a business is to maximize the retained earnings available to the corporations shareholders       

False

Shareholder wealth maximization means maximizing the price of the existing common stock   

True


Ethical behavior        

is essential in business because unethical behavior destroys trust and business relationships


Investors generally don’t like risk, Therefore, a typical investor

will only take an additional risk if he expects to be compensated in the form of additional returen


A corporate treasurer is typically responsible for cash management, credit management, and raising capital   

True


Determining how a firm should raise money to fund its long-term investments is referred to as capital structure decisions    

True


The Chief Financial Officer (CFO) is responsible for overseeing financial planning, corporate strategic planning, and controlling the firms cash flow  

True


The financial manager most directly responsible for producing the company’s financial statements and directing its cost accounting functions is the:   

controller


The three basic types of issues addressed by the study of finances are

  capital budgeting, capital structure decisions, and working capital management


Working capital management is concerned with        

how a firm can best manage its cash flows as they arise in its day-to-day operations


Capital budgeting is concerned with  

what long-term investments a firm should undertake


Determining the best way to raise money to fund a firms long-term investment is called      

the capital structure decisions


The best form of business entity to attract new capital is the sole proprietorship because investors only need to deal with one owner      

False


S-type corporations and limited liability companies are taxed like partnerships, but have the advantage of limited liability for their owners       

True

If we invest money for 10 years at 8% interest, compounded semi-annually, we are really investing money for 20 six-month periods, and receiving 4% interest each period 

True


For a given stated interest rate, an investor would receive a greater future value with daily compounding as opposed monthly compunding 

True


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