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Chapter 1 - Overview of Corporate Finance

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  • The interest conflict between principal and agent leads to......
    the agency problem
  • If a person starts up his/her business using all of his or her money. Who is he/she?
    an entrepreneur
  • Capital structure is the ratio between.....and........
    debt and equity
  • A part of Net Income of a company used for the future investment is.....
    Retained Earnings
  • Is the CFO responsible for accounting and financial statements directly?
    No. Controller does these tasks directly but CFO manages.
  • Making investment proposals, evaluation, and decide which project should be done is...
    capital budgeting or investment appraisal
  • In a corporation, who is responsible for cash management and fund raising?
    Treasurer
  • Is it critical for a CFO to understand the business activities?
    Yes. CFO needs to understand a business before managing them.
  • How many strategic decisions does a financial manager make?
    3 decisions: investment/financing/payout decision.
  • Besides the fixed assets, you need to spend resources to buy materials, hire labour, and pay other necessary expenses. That means you need.....
    working capital
  • If a close private company wants to become a publicly traded company, it must go through......
    Initial Public Offerings (IPO)
  • The necessary money invested to start up your business is called...
    Capital
  • ......market is the place connecting lenders and borrowers. To raise funds, the lenders have to pay........for the borrowers. The higher.......of the lenders, the higher...........they have to pay.
    The financial market/risk/interest rate
  • In a corporation, agency problem arises due to the separation between.....and....
    ownership and control
  • Every one with a share of a corporation has the voting right?
    No. Just common share. Preferred shareholders do not have such right because they are senior in getting dividends.
  • Who is the ownership of a corporation?
    Shareholder
  • ...........is the place you can exchange the financial instruments with not-over-1 year duration. If a business wants to raise funds for investment, it need.........., which consists of...........and.............
    The monetary market/the capital market/equity market/debt market
  • Financing decision is about how to distribute the profit-after-tax of a corporation?
    No. It is about how to raise funds for investment
  • Besides investing in....., a company can use its money to buy bonds or stocks, which are called....
    physical (real)/financial assets
  • Citi Group, HSBC, Dragon Capital, Vietcombank are.....in the financial market.
    Financial intermediaries
  • Plans, Property, and Equipment are....
    Fixed assets
  • Two important elements that a financial manager must be sure about an investment project is its... and its...
    risk and return
  • Maximize the.............is the way to maximize the shareholders' wealth.
    current market price
  • What is the final goal of financial management?
    Maximize shareholders' wealth
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