FM2025

Agency costs

• arise as a result of the payment of commission by the commission agent

• caused by a gap between the interests of the company’s owners and the top management’s interests

• arise due to the risk aversion of investors

• can be minimized by hedging risks

• correspond to production costs

Agency costs

• arise as a result of the payment of commission fees by the commission agents

• can be minimized by hedging risks

• can be minimized by tightly linking the top management remuneration to the growth of market share price

• must be included in the cost of production

• can be minimized by tightly linking the remuneration of top managers to the company's profit

The concept of opportunity costs means

• the need to measure the costs of the enterprise with the average industry indicators

• the objective necessity of using situational modeling in investment analysis

• the conditionality of any financial or investment decision by rejecting any alternative option

• the possibility of the existence of implicit costs

• that each source of financing has its own cost

The market capitalization of the company is 

• The number of outstanding shares multiplied by the share price

• The total volume of issue of all securities of the company traded on the market

• The total equity capital of the issuing company at par value

• The total market value of the assets of the issuing company

• The number of outstanding shares multiplied by the nominal value of a  share

Management of sources of financing includes  (2)  

• Searching of financial resources

• determination of the optimal structure of funding sources

• determination of investment directions

• analysis of the composition and structure of short-term funding sources

•   determination of the optimal dividend policy

Investment decisions are decisions, related to (2)

• the renewal of the existing material and technical base

• the increase in production volumes

• the development of new types of activities

• the formation of working capital

Maximizing shareholders’ wealth of and maximizing the profit of the enterprise, as the goals of financial management, may not coincide due to the influence of the following factors: (2)

• different time horizons

• different investment horizons

• attitude to investment risksdifferent approaches to assessing the economic efficiency of the company

• various corporate governance objectives

Which of the following statements describes the main objective of financial management?

• Efficient acquisition and deployment of financial resource to ensure achievement of objectives

• Providing information to management for day to day functions of control and decision making

• Providing information to external users about the historical results of the organization

• Maximisation of profit

The categories of financial management include:

• Cash flows

• Profit

• Amortization

• All of the above

Which of the following statements describes the main objective of financial management?

• Profit maximization

• Leadership in the fight against competitors

• Maximizing the market price of the company's equity

• Steady growth in sales volumes