This website uses cookies to ensure you have the best experience. Learn more

Finance Examination Essay

2865 words - 12 pages

Finance Examination

Chapter 1
Discussion Questions and Solutions

3. In a corporation, what group has the ultimate responsibility for protecting and
managing stockholder’s interests?
A corporation’s top management has the ultimate responsibility of protecting and managing stockholder’s interests. There are essentially two groups responsible for protecting and managing the interests of stockholders being the Board of Directors and the top Management Team. However, the ultimately responsibility falls with the top management team, as they tend to be on hands-on in the daily operations of a business or a corporation. The top management team includes the Chief Executive Officer (CEO), ...view middle of the document...

Agency theory suggests that the firm can be viewed as a nexus of contracts (loosely defined) between resource holders. An agency relationship arises whenever one or more individuals, called principals (business owners or shareholders), hire one or more other individuals, called agents (managers), to perform some service and then delegate decision-making authority to the agents. This means that agents are the managers of the company. The primary agency relationships in business are those
(a) Between stockholders (shareholders) and managers and
(b) Between debt holders and stockholders.
These relationships are not necessarily harmonious, thus agency theory is concerned with so-called agency conflicts, or conflicts of interest between agents and principals. This has implications for, among other things, corporate governance and business ethics. When agency exists it also tends to give rise to agency costs, which are expenses incurred in order to sustain an effective agency relationship (for instance, offering management performance bonuses to encourage managers to act in the shareholders' interests). Accordingly, agency theory has emerged as a dominant model in the financial economics literature, and is widely discussed in business ethics texts.
The theory of agency is important in public corporations because in privately owned firms, management and owners are usually the same people, and in public corporations on the other hand, it involves more than the owners to run the firm due to appointment of mangers. As a company moves from private to public ownership, management (or managers) now represents all the owners. This places management in the agency position of making decisions and acting on those decisions which should be in the best interests of all shareholders.
6. Why are institutional investors important in today's business world?
Institutional investor are large corporations, entities, group of individuals, companies, brokers, or financial investors who have a lot of financial might and ability as well as knowledge and expertise in running businesses. They usually invest by buying large stocks, buying companies, merging companies, or even establishing or expanding their own companies or business operations. The main reason institutional investors are important to the current business world is that they can have more clout than individual investors. Because they can own large blocks of stock in a corporation, hence they can exercise more influence in how they company is run. Moreover, institutional investors are generally more knowledgeable than individuals and have the resources to follow and understand what a business is doing. They bring liquidity to the company which in turn enhances the process of cash flow to the business.
7. Why is profit maximization, by itself, an inappropriate goal? What is meant by the goal
of maximization of shareholder’s wealth?
This is because of the fact that profit maximization is not...

Other Papers Like Finance Examination

Management Accounting & Applied Finance (Maaf)

1160 words - 5 pages (including budgeting and forecasting) Online assessment 9 10 11 12 Performance analysis Performance measurement and management Investment decisions Short-term and medium-term financial management Online assessment 13 14 15 Long-term financial management Business risk Introduction to business valuation 7 13 7 120 Final examination 10 9 8 5 11 4 7 6 Approximate hours 11 7 7 8 Management Accounting & Applied Finance Module outline – page 2 of

Perceptual Map Essay

697 words - 3 pages and Technology of China 21. Xiamen University 22. Wuhan University 23. Southwestern University of Finance and Economics Explanation: 1) The horizontal axis represents the comprehensive level of the university/school and it consists of four main parts: The freshmen’s college entrance examination scores, the quality of the university graduates, the academic level of the university and the educational quality of the university. 2) The

Finance Management

2342 words - 10 pages Examination Paper: Finance Management IIBM Institute of Business Management Examination Paper International Financial Management Section A: Objective Type (30 marks)  This section consists of Multiple choice & Short Answer type questions.  Answer all the questions.  Part One questions carry 1 mark each & Part Two questions carry 5 marks each. Part One: Multiple choices: 1. Foreign exchange market in India is relatively very a. Big b. Small c

Market Efficiency and Anomalies

1645 words - 7 pages examination of stock markets’, International Journal of Management, vol. 28, no. 4, pp. 165-195. Jegadeesh, N. and Titman, S. 1993, ‘Returns to buying winners and selling losers: Implications for stock market efficiency’, Journal of Finance, vol.48, no.1, pp. 65-91. Jegadeesh, N. and Titman, S. 2001, ‘Profitability of momentum strategies: An evaluation of alternative explanations’, Journal of Finance, vol.56, no.2, pp. 699-720. Jegadeesh, N

Push or Pull as a Business Model:

837 words - 4 pages international dimension of financial issues. It focuses on the specifically international aspects of financial management so you are able to appreciate the additional sources of finance and the added issues that international investment and money management that international operation involves. This module aims to examine the various theories of exchange rate determination, and gives an appreciation of the issues relevant to international

Advance Institute of Competetive Studies

1589 words - 7 pages . They will be trained for accounting, marketing, finance, investment as well as billing and a PO’s career can progress is any one of the mentioned fields. Normally after the confirmation the Bank PO becomes Assistant Bank Manager and may be posted in any branch across the country to handle daily customer transaction like passing a cheque, cash management, draft issuance etc. After considerable years of experience and if suited for the job they can

Customer Satisfaction in Commercial Bank

1563 words - 7 pages An Internship Report On ip Report on OVERALL CUSTOMER SATISFACTION- (A Study on Standard Chartered Bank) Overall Customer Satisfaction (A case study on Standard Chartered Bank) An Internship Report BY Md. Saifur Rahman Registration No. 00545 Examination Roll No. 10 Session: 2003-2004 Faculty of BAM Bachelor of Business Administration (BBA) Major In Finance FACULTY OF BUSINESS ADMINISTRATION & MANAGEMENT

Business Environment Past Papers

1129 words - 5 pages of the terms ‘corporate aims’, ‘corporate objectives’ and ‘corporate strategy’. 1.1.2 Explain how objectives and aims might change through the life of a business: survival, break-even, growth, profit maximisation, market share, diversification. 1.2 Describe the human and other resources required by a business, and relate the resources to corporate objectives. 1.2.1 Describe the inputs required by a business: labour, suppliers, finance, land

Business Management

1129 words - 5 pages of the terms ‘corporate aims’, ‘corporate objectives’ and ‘corporate strategy’. 1.1.2 Explain how objectives and aims might change through the life of a business: survival, break-even, growth, profit maximisation, market share, diversification. 1.2 Describe the human and other resources required by a business, and relate the resources to corporate objectives. 1.2.1 Describe the inputs required by a business: labour, suppliers, finance, land

Uk Post Office

7765 words - 32 pages same outputs as those of the Private Finance Initiative deal under examination. Table 1. Potential advantages and disadvantages of Private Finance Initiative deals Advantages There can be greater price certainty. The public sector body and contractor agree the annual unitary payment for the services to be provided. This should usually only change as a result of agreed circumstances. Responsibility for assets is transferred to the contractor. The

Sr-Rm-004

1076 words - 5 pages In order to design and development an integrated state-of-the art human resources information system, the initial step is to define Riordan’s business needs and its current technical resources. Riordan’s ERP system was installed in 1992 and independent from its branch offices. This system is an integral part of the finance and accounting application. Riordan employs over 550 people and has offices located in California, Michigan, Georgia, and

Related Essays

2401 Exam 07 Essay

1340 words - 6 pages OFFICE USE ONLY AFF/AFW2401 Replacement Paper 24.5.07 Page 1 of 18 Monash University Semester One Examination 2007 Faculty of Business and Economics Department of Accounting and Finance EXAM CODES: AFF/AFW2401 TITLE OF PAPER: COMMERCIAL BANKING AND FINANCE EXAM DURATION: 3 hours READING TIME: 10 minutes THIS PAPER IS FOR STUDENTS STUDYING AT: (office use only - tick where applicable) Berwick Clayton Peninsula Distance Education

Course Outline

1875 words - 8 pages Course outline for BUSN85 STRATEGIC CORPORATE FINANCE, Fall 2014, 7.5 credits Introduction The main objective of the course is to further your understanding of the theory and econometrics of corporate finance beyond what is covered in previous courses in corporate finance (esp BUSN92 Empirical Corporate Finance). It is not necessary to have completed BUSN92 Empirical Corporate Finance (corporate finance students), nor BUSN80 Financial

Jjjjjjkvb Essay

2268 words - 10 pages NEHA BANSAL RAVI BANSAL ANIKA APARTMENT, NR. NIMRA INSTITUTE, NAVRANGPURA, AHMEDABAD. CONTACT NO: - 09228812241 E-MAIL:- ravibansal2010@hotmail.com Objective To work and gain experience with best corporates. So that I can prove beneficial to my company and enable myself to attain strategic-level heights in the corporate ladder. Academic Credentials Examination Board/University Marks

Allama Iqbal Paper

1543 words - 7 pages Enquiries regarding result should be addressed to Mr. Nasim Mahmood Ahmad Khan Assistant Controller Examinations (Matric) Phone No. 9200752 /Ext. 868 Board Campus, Gujranwala ii. The Enquiries regarding adjustment of dues such as examination fee etc. should be addressed to Mr. Abdul Sattar Akhtar Deputy Secretary (Finance) Board Campus, Gujranwala Phone No.9200752 Ext. 879. Mr. Nasim Mahmood Ahmad Khan Prof. Muhammad Abbas Harel Assistant Controller Examinations (Matric) Controller of Examinations Phone No.9200752 Ext. 868 Phone No.9200746 ----------------------- [pic]