FIN350 - Chapter 1A

Question 1

7. The primary goal of a financial manager in a profit-seeking organization is to________.

Accepted Answer

maximize the owners' wealth.

Question 2

8. __ are physical locations or electronic forums that facilitate flow of funds among investors, businesses and govts.

Accepted Answer

Financial Markets

Question 3

5. Finance has its origins in which of the following business disciplines?

Accepted Answer

accounting and economics

Question 4

13. The most recent, major economic recession (aka “The Great Recession”) began ___________.

Accepted Answer

early in 2008 and continued through mid-2009.

Question 5

15. Finance is founded on six principles, including the following three:

Accepted Answer

Time Value of Money, Risk vs. Return, and Diversification of Risk

Question 6

20. Money in hand today, is worth more than the promise of receiving the same amount in the future, refers to ______

Accepted Answer

time value of money.

Question 7

1. Finance is the study of how individuals, institutions, governments and businesses _____ and other financial assets.

Accepted Answer

acquire, spend and manage money

Question 8

16. Finance is founded on six principles, including the following three: Efficient Financial Markets,

Accepted Answer

Management vs. Owner Objectives, and Reputation Matters.

Question 9

18. _______ refers to how an individual or organization treats others legally, fairly and honestly.

Accepted Answer

Ethical behavior

Question 10

6. Banks, insurance companies and investment companies are also known as ________.

Accepted Answer

intermediaries.

Question 11

10. Investors include ________ and ______ as well as equity investors.

Accepted Answer

savers and lenders

Question 12

3. Financial institutions are also referred to as _____.

Accepted Answer

intermediaries

Question 13

4. One of the functions of an intermediary is to transfer funds from savers and investors to _________.

Accepted Answer

individuals, businesses and governments.

Question 14

17. The possible conflict between managers and owners is sometimes called the _______.

Accepted Answer

principal-agent problem.

Question 15

19. A financial market is said to be _____ when prices of securities reflects all information available to the public.

Accepted Answer

information efficient

Question 16

11. A “price bubble” for technology stocks, including so-called “dot.com” start-ups, burst in the U.S. in _____.

Accepted Answer

2000

Question 17

2. The three areas of finance are: Institutions and Markets, Investments and _____.

Accepted Answer

Financial Management

Question 18

14. As noted in Chapter 1, one of the reasons to study finance is ______.

Accepted Answer

to make informed personal and business investment decisions.

Question 19

9. Successful businesses typically move through five stages, including:

Accepted Answer

development, start-up, survival, rapid growth and maturity.

Question 20

12. The U.S. housing bubble burst in _____, which resulted in a shard decline in housing values.

Accepted Answer

2006

Questions 20