Meeting #1 FINANCIAL MANAGEMENT_CORE CONCEPTS

The means by which a company is financed refers to the firm's ________.

• A) capital budgeting

• B) capital structure

• C) accounts receivable management

• D) working capital management

At its most basic level, the function of financial intermediaries is to ________.

• A) track and report interest rates

• B) move money from lenders to borrowers and back again

• C) report all financial transactions to the federal government

• D) effect a transfer of wealth in society

Which of the following is NOT an example of a financial transaction?

• A) Your parents use their credit card to pay this term's college tuition.

• B) You use the ATM to withdraw British pounds so you can fly to London.

• C) Your roommate lends you $20 and you repay it in one week.

• D) All of the above are financial transactions.

The movement of money from lender to borrower and back again is known as ________.

• A) the circle of life

• B) corporate finance

• C) the cycle of money

• D) money laundering

Which of the following best identifies the four main areas of finance?

• A) Exchange rate management, investments, financial institutions and markets, international finance

• B) Corporate finance, investments, capital structure, international finance

• C) Corporate finance, investments, financial institutions and markets, international finance

• D) Corporate finance, capital budgeting, financial institutions and markets, regulation

________ is the area of finance concerned with activities such as borrowing funds to finance projects such as plant expansions or new product launches.

• A) Working capital management

• B) International finance

• C) Investments

• D) Corporate finance

Financial institutions and markets

• A) are the organized financial intermediaries and the forums that promote the cycle of money.

• B) compose the set of financial activities that support the operations of a business.

• C) are the activities centered on the purchase and sale of financial assets.

• D) are concerned only with the addition of a multinational element to all finance activities.

Of the following, which is NOT an activity engaged in by a financial intermediary?

• A) Matching borrowers and lenders

• B) Bearing risk

• C) Managing retirement portfolios for large classes of employees

• D) All of the above are activities of financial intermediaries.

Which of the following is NOT an example of an equity market transaction?

• A) Mary sells her shares of Apple stock.

• B) Mark contacts his broker and requests a purchase of IBM bonds.

• C) Sahid buys shares of a small company stock traded on the NASDAQ.

• D) All of the above are equity market transactions.

The sale of "new" securities, where the financial asset is being traded for the very first time, is said to take place in the ________ market.

• A) primary

• B) money

• C) secondary

• D) capital