Financial Management Basics
This is the main goal of financial management.
What is to maximize shareholder wealth (or stock value)?
The simplest and most common form of business ownership.
What is sole proprietorship?
The person at the top of the financial team.
Who is the CFO (Chief Financial Officer)?
This type of conflict happens when managers don’t act in owner’s best interest.
What is an agency problem?
Where a company sells stock for the first time.
What is the primary market?
This area of finance involves buying assets like stocks and bonds.
What is investments?
This form has limited liability and easy ownership transfer.
What is a corporation?
This decision involves planning large projects.
What is capital budgeting?
A way to align manager and shareholder goals using pay.
What are stock options (or stock-based compensation)?
Where existing shares are traded.
What is the secondary market?
Finance that deals with banks and insurance companies.
What is financial institutions?
This form is taxed like a partnership but offers limited liability.
What is an LLC (limited liability company)?
This decision concerns whether to use debt or equity.
What is capital structure?
This is when shareholders try to replace company leadership.
What is a proxy fight?
A market where dealers post prices electronically.
What is an OTC (over-the-counter) market?
A modern field of finance using tech like crypto and apps.
What is fintech?
Owners in this form may have “unlimited liability.”
What is a partnership or sole proprietorship?
This decision concerns day-to-day operations like cash and inventory.
What is working capital management?
This act was passed to reduce accounting fraud in 2002.
What is the Sarbanes-Oxley Act (SOX)?
The largest U.S. auction-style market.
What is the NYSE (New York Stock Exchange)?
This area focuses on currency exchange, global risk, and international firms.
What is international finance?
This legal document gives a corporation life.
What is the articles of incorporation (or charter)?
The person under the CFO who handles investing, budgeting, etc.
Who is the treasurer?
These non-owner groups also care about a firm's decisions.
What are stakeholders?
This term means a stock meets listing standards of an exchange.
What is listed?