Financial Management – Course Notes Flashcards

Fill-in-the-blank flashcards covering key topics from the lecture notes on financial management, including axioms, major areas, career roles, organizational forms, ethics, and financial decision concepts.

The three major areas of Finance are Financial Management, Financial Institution and Market, and __.

Investments

Financial management is also called __ or Business Finance.

Corporate Finance

Axiom 1 states the __ Trade-off.

Risk-Return

Axiom 2 states the __ of Money.

Time Value of Money

Axiom 3: Cash – Not Profits – Is __.

King

Incremental cash flow is the difference between the cash flows when the project is taken against the cash flows of the enterprise when the project is __.

undertaken

Axiom 5 is the Curse of __ Markets.

Competitive

An Efficient Capital Market implies prices reflect all available information; in such markets prices are __.

right

The Agency Problem arises when managers may not act in the best interests of __.

stockholders

Axiom 8 states that taxes bias business decisions by considering after‑tax __ cash flows.

incremental

Axiom 9 says all risk is not equal and risk can be reduced by __.

diversification

Intrinsic value is an estimate of a stock’s '' value.

true

The three important business trends are globalization, improving IT, and __ governance.

corporate

Enron and WorldCom are famous examples of corporate __.

scandals

The Dodd-Frank Act created bodies to monitor financial risks and enforce consumer protection; this is an example of __.

regulation

The Modern Finance Function has four roles: Steward, Operator, Strategist, and __.

Catalyst

There are four main forms of business organizations: proprietorships, partnerships, corporations, and __.

LLCs and LLPs

Double taxation occurs when a corporation’s earnings are taxed at the corporate level and again when paid out as __.

dividends

A Branch Manager oversees branch office activities such as __.

loan origination

The Capital Budgeting Analyst/Manager is responsible for the evaluation and selection of proposed projects and for the allocation of funds for __.

projects

The Pension Fund Manager allocates funds among asset types such as bonds, equities, and __.

real estate

Real estate lenders are categorized as construction lenders and __ lenders.

permanent

In the Investments field, the three activities are security analysis, portfolio theory, and __.

market analysis

A firm’s value is the present value of the stream of cash flows that the asset provides; this is the concept of __ value.

intrinsic

The primary goal of a corporation is to maximize its owners’ value, i.e., __ wealth.

shareholder

The SEC gained authority under the Dodd-Frank Act to regulate __ access to proxies.

shareholder

A stock’s price is influenced by the level of expected cash flows and the level of __; higher cash flows and lower risk raise the price.

risk

Ethical behavior is Doing the Right Thing, and Ethical Dilemmas are __ in Finance.

everywhere