Intro to Finance Exam 1 Flashcards

Covers chapters/topics leading up to Exam 1

What are real assets?

Physical resources that you can see and touch (like machinery, equipment)

What are intangible assets?

Resources that you can’t see or touch (like a brand name, copyright)

What is a financial asset?

A non-physical asset that represents future cash flows/stake in a firm (like stocks, bonds) used to pay for real & intangible assets.

What is the Capital Budgeting/Investment Decision?

The decision you make on what assets to buy/invest in.

What is the Financing decision?

The decision you make on how to raise money/pay for the assets you buy.

Do large corporations survive even if you dismiss managers?

Yes (because there is a board of directors that can appoint new managers).

How do you solve for the PV(present value) or FV(future value) of an annuity due?

You start by finding the PV or FV of an ordinary annuity and then multiply that by (1+r)