Volume of 3 pages (825 words)
Assignment type : Reports
Respond to the following questions. Write your responses in a Word document, and number them 1–10.
1. Define the terms finance and financial management. What are the major sub-areas of finance?
2. Identify and define the three basic forms of business ownership. Describe the advantages and disadvantages of each.
3. Define the terms agency relationship and agency problem. Explain three different approaches to minimizing the agency problem.
4. Explain why ethical behavior is so important in the field of finance.
5. Explain the concept of shareholder wealth maximization. Is there a conflict between the goal of shareholder wealth maximization and the financial manager’s need to act in an ethical manner? Why or why not?
6. Categorize each of the following transactions as taking place in either the primary or secondary market:
• Supercorp issues $180 million of new common stock.
• HiTech, Inc. issues $30 million of common stock in an IPO.
• Megaorg sells $10 million of HiTech preferred stock from its marketable securities portfolio.
• The XYA Fund buys $220 million of previously issued Supercorp bonds.
• A.B. Corporation sells $15 million of XYZ common stock.
7. Identify whether the following financial instruments are capital market securities or money market securities:
A. U.S. Treasury bills.
B. U.S. Treasury notes.
C. U.S. Treasury bonds.
E. Federal funds.
F. Negotiable certificates of deposit.
G. Common stock.
H. State and government bonds.
I. Corporate bonds.
8. Identify the different types of financial institutions. What are the main services each of these financial institutions offers?
9. Define the six factors that determine the nominal interest rate on a security.
10. Define the concept of term structure of interest rates. What are three theories that explain the future yield curve of interest rates?