Chapter 21, Problem 3QA

Which function of a financial intermediary reduces transaction and information costs between a corporation and individual which may encourage a higher rate of savings? Select one: a. Administration of the payments mechanism b. Information production services. c. Money supply management. d. Asset transformation services. e. Brokerage services.

Which of the following roles provide funds to be used by financial managers to finance corporate growth? A. Financial market  B. Financial intermediaries C. Investors D. Suppliers

Explain what is meant by agency relationships and agency costs. Why management may tend to pursue goals other than shareholder wealth maximization. Give some examples of agency costs incurred by shareholders in the agency relationship between the shareholders (owners) and management of a firm.

Which of the following statements is true? a. Determining how day-to-day financial matters should be managed is not a function of financial managers.  B. The goal of the firm is to maximize market share.  C. Working capital management refers to identifying productive long-term assets the firm could acquire to maximize net benefits.  D. Capital budgeting refers to identifying productive long-term assets the firm could acquire to maximize net benefits.

Why is understanding the relationship between the cash conversion cycle (CCC) and net working capital important to the contemporary business executive? Explain ways in which executive decisions regarding the CCC and net working capital can affect a company both adversely and beneficially. Support your response with a specific example from the business world.

What should the ultimate financial aims of a company be and what role should the finance function play in their achievement? In particular, which of the related responsibilities of the finance department involve a direct interface with management?

Why is it important to monitor the alliance portfolio in terms of implementing business unit strategies and corporate strategy and policies?

Which of the following best characterizes an agency problem? Group of answer choices   a spending corporate resources b dislike of firm's bondholders by its equity holders c differing incentives between managers and owners d friction between the primary and secondary markets

Select all that is true about the role of financial managers and the types of financial decisions they make. a. The optimal financial management strategy of a financial manager is to reduce the overall risk level of the firm.b. The duties of the financial manager includes determining the capital structure and which projects the firm should undertake.c. Capital structure describes the mix of short-term liabilities a firm uses to finance its short-term assets.d. Capital Budgeting function involves planning and determining the firm’s short term investments.e. Determining the appropriate level of inventory is a working capital management function.f. Size and timing of cash flows is unimportant in a capital budgeting decision.