the cycle of money, the participants in the cycle, and the common objective
of borrowing and lending.
2. Distinguish the four
main areas of finance and briefly explain the financial activities that
3. Explain the different
ways of classifying financial markets.
4. Discuss the three
main categories of financial management.
5. Identify the main
objective of the finance manager and how that objective might be
6. Explain how the
finance manager interacts with both internal and external players.
7. Delineate the three
main types of business organizations and their respective advantages
8. Illustrate agency
theory and the principal-agent problem.
9. Review issues in
corporate governance and business ethics.
the foundations of the balance sheet and income statement
2. Use the cash flow
identity to explain cash flow.
3. Provide some context
for financial reporting.
4. Recognize and view
Internet sites that provide financial information.
1. Debits always equal credits. What
type of accounting system uses this requirement? What is the accounting
identity? What is the connection between “debits
always equal credits” and the accounting identity?
2. From the income
statement accounts below,
a. produce the
income statement for the year.
b. produce the operating cash flow for the year.
Statement Accounts for the Year Ending 2007
Cost of Goods Sold
1950, the interest rates for long-term government bonds have averaged a higher
interest rate than short-term government bonds. Why?
4. During what decade
from 1950 to 1999 did we see the highest interest rates in the United States?
5. What is a bond? What
determines the price of this financial asset?
is the primary difference between an annual bond and a semiannual bond? What
changes do you need to make in finding the price of a semiannual bond versus an
we talk about the yield of a bond, we usually mean the yield to maturity of the
are three key features of common stock?
9. What are the differences between authorized,
issued, and outstanding shares?
10. What is the role of the investment banker
in the primary sale of common stock?
11. What are the potential repercussions if the
investment banker does not perform the due diligence task?
12. What is the function of a specialist in the
13. What is a bid price and what is an ask
14. What is the difference between preferred
stock and common stock?