Business and Corporate Finance
| Description: Business and Corporate Finance Quiz | |
| Number of Questions: 15 | |
| Created by: Aliensbrain Bot | |
| Tags: finance business economics |
What is the primary goal of corporate finance?
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To maximize shareholder wealth
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To minimize costs
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To increase sales
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To improve customer satisfaction
The primary goal of corporate finance is to maximize shareholder wealth, which can be achieved through various strategies such as increasing profitability, reducing costs, and making sound investment decisions.
Which of the following is NOT a source of long-term financing for a corporation?
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Equity financing
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Debt financing
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Retained earnings
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Trade credit
Trade credit is a short-term financing option, typically provided by suppliers, where a company can purchase goods or services on credit and pay for them at a later date. Equity financing, debt financing, and retained earnings are all sources of long-term financing.
What is the difference between a stock and a bond?
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A stock represents ownership in a company, while a bond is a loan to a company.
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A stock is a short-term investment, while a bond is a long-term investment.
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A stock pays dividends, while a bond pays interest.
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All of the above.
A stock represents ownership in a company, while a bond is a loan to a company. A stock is a long-term investment, while a bond can be either short-term or long-term. A stock pays dividends, while a bond pays interest.
What is the time value of money?
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The concept that money today is worth more than the same amount of money in the future due to its potential earning power.
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The concept that money today is worth less than the same amount of money in the future due to inflation.
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The concept that money today is worth the same as the same amount of money in the future.
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None of the above.
The time value of money is the concept that money today is worth more than the same amount of money in the future due to its potential earning power. This is because money today can be invested and earn interest, which increases its value over time.
What is the weighted average cost of capital (WACC)?
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The average cost of all the different sources of financing used by a company, weighted by their respective proportions in the company's capital structure.
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The cost of equity financing only.
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The cost of debt financing only.
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The cost of preferred stock financing only.
The weighted average cost of capital (WACC) is the average cost of all the different sources of financing used by a company, weighted by their respective proportions in the company's capital structure. This includes the cost of equity financing, debt financing, and preferred stock financing.
What is the difference between a capital budget and an operating budget?
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A capital budget is used to plan for long-term investments, while an operating budget is used to plan for short-term expenses.
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A capital budget is used to plan for short-term investments, while an operating budget is used to plan for long-term expenses.
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A capital budget is used to plan for both long-term and short-term investments, while an operating budget is used to plan for both long-term and short-term expenses.
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None of the above.
A capital budget is used to plan for long-term investments, such as the purchase of new equipment or the construction of a new building. An operating budget is used to plan for short-term expenses, such as salaries, rent, and utilities.
What is the purpose of a financial statement?
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To provide information about a company's financial performance and position.
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To provide information about a company's management team.
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To provide information about a company's employees.
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To provide information about a company's customers.
The purpose of a financial statement is to provide information about a company's financial performance and position. This information can be used by investors, creditors, and other stakeholders to make informed decisions about the company.
What are the three main financial statements?
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Balance sheet, income statement, and statement of cash flows.
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Balance sheet, income statement, and statement of retained earnings.
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Balance sheet, income statement, and statement of changes in equity.
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Balance sheet, income statement, and statement of comprehensive income.
The three main financial statements are the balance sheet, income statement, and statement of cash flows. The balance sheet provides a snapshot of a company's financial position at a specific point in time, the income statement provides information about a company's financial performance over a period of time, and the statement of cash flows provides information about a company's cash inflows and outflows over a period of time.
What is the difference between an asset and a liability?
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An asset is something that a company owns, while a liability is something that a company owes.
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An asset is something that a company uses to generate revenue, while a liability is something that a company uses to pay expenses.
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An asset is something that a company has control over, while a liability is something that a company does not have control over.
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All of the above.
An asset is something that a company owns, while a liability is something that a company owes. An asset is something that a company uses to generate revenue, while a liability is something that a company uses to pay expenses. An asset is something that a company has control over, while a liability is something that a company does not have control over.
What is the difference between equity and debt financing?
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Equity financing involves selling ownership in a company to investors, while debt financing involves borrowing money from lenders.
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Equity financing is a long-term source of financing, while debt financing is a short-term source of financing.
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Equity financing is more expensive than debt financing.
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All of the above.
Equity financing involves selling ownership in a company to investors, while debt financing involves borrowing money from lenders. Equity financing is a long-term source of financing, while debt financing can be either short-term or long-term. Equity financing is typically more expensive than debt financing.
What is the purpose of a dividend?
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To distribute profits to shareholders.
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To attract new investors.
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To increase the value of a company's stock.
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All of the above.
The purpose of a dividend is to distribute profits to shareholders. Dividends can be paid in cash, stock, or other assets.
What is the difference between a stock split and a stock dividend?
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A stock split increases the number of shares outstanding, while a stock dividend does not.
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A stock split decreases the number of shares outstanding, while a stock dividend does not.
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A stock split changes the par value of a share, while a stock dividend does not.
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All of the above.
A stock split increases the number of shares outstanding, while a stock dividend does not. A stock split decreases the par value of a share, while a stock dividend does not.
What is the purpose of a merger or acquisition?
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To increase market share.
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To reduce costs.
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To gain access to new markets.
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All of the above.
The purpose of a merger or acquisition is to increase market share, reduce costs, gain access to new markets, or all of the above.
What is the difference between a horizontal merger and a vertical merger?
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A horizontal merger is between two companies in the same industry, while a vertical merger is between two companies in different industries.
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A horizontal merger is between two companies in different industries, while a vertical merger is between two companies in the same industry.
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A horizontal merger is between two companies that are competitors, while a vertical merger is between two companies that are not competitors.
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None of the above.
A horizontal merger is between two companies in the same industry, while a vertical merger is between two companies in different industries.
What is the purpose of a leveraged buyout (LBO)?
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To take a company private.
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To increase the company's debt.
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To improve the company's financial performance.
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All of the above.
The purpose of a leveraged buyout (LBO) is to take a company private.