罗斯 公司理财 名词解释习题答案

罗斯 公司理财 名词解释习题答案

CONCEPT QUESTIONS - CHAPTER 1

1.1 What are the three basic questions of corporate finance?

a. Investment decision (capital budgeting): What long-term investment strategy

should a firm adopt?

b. Financing decision (capital structure): How much cash must be raised for the required investments?

c. Short-term finance decision (working capital): How much short-term cash

flow does company need to pay its bills.

Describe capital structure.

Capital structure is the mix of different securities used to finance a firm's

investments.

List three reasons why value creation is difficult.

Value creation is difficult because it is not easy to observe cash flows directly.

The reasons are:

a. Cash flows are sometimes difficult to identify.

b. The timing of cash flows is difficult to determine.

c. Cash flows are uncertain and therefore risky.

1.2 What is a contingent claim?

A contingent claim is a claim whose payoffs are dependent on the value of the

firm at the end of the year. In more general terms, contingent claims depend on

the value of an underlying asset.

Describe equity and debt as contingent claims.

Both debt and equity depend on the value of the firm. If the value of the firm is

greater than the amount owed to debt holders, they will get what the firm owes

them, while stockholders will get the difference. But if the value of the firm is

less than equity, bondholders will get the value of the firm and equity holders

nothing.

1.3 Define a proprietorship, a partnership and a corporation.

A proprietorship is a business owned by a single individual with unlimited

liability. A partnership is a business owned by two or more individuals with

unlimited liability. A corporation is a business which is a "legal person" with

many limited liability owners.

What are the advantages of the corporate form of business organization? Limited liability, east of ownership transfer and perpetual succession.

1.4 What are the two types of agency costs?

Monitoring costs of the shareholders and the incentive fees paid to the managers.

How are managers bonded to shareholders?

Answers to Concept Questions A-1

罗斯 公司理财 名词解释习题答案

a. Shareholders determine the membership to the board of directors, which

selects management.

b. Management contracts and incentives are build into compensation

arrangements.

c. If a firm is taken over because the firm's price dropped, managers could lose

their jobs.

d. Competition in the managerial labor market makes managers perform in the

best interest of stockholders.

Can you recall some managerial goals?

Maximization of corporate wealth, growth and company size.

What is the set-of-contracts perspective?

The view of the corporation as a set of contracting relationships among

individuals who have conflicting objectives.

1.5 Distinguish between money markets and capital markets.

Money markets are markets for debt securities that pay off in less than one year,

while capital markets are markets for long-term debt and equity shares.

What is listing?

Listing refers to the procedures by which a company applies and qualifies so that its stock can be traded on the New York Stock Exchange.

What is the difference between a primary market and a secondary market?

The primary market is the market where issuers of securities sell them for the first time to investors, while a secondary market is a market for securities previously

issued.

CONCEPT QUESTIONS - CHAPTER 2

2.1 What is the balance-sheet equation?

Assets = Liabilities + Stockholders' equity

What three things should be kept in mind when looking at a balance sheet? Accounting liquidity, debt vs. equity, and value vs. cost.

2.2 What is the income statement equation?

Revenue - expenses = Income

What are the three things to keep in mind when looking at an income

statement?

Generally Accepted Accounting Principles (GAAP), noncash items, and time and costs.

A- Answers to Concept Questions 2

罗斯 公司理财 名词解释习题答案

What are noncash expenses?

Noncash expenses are items included as expenses but which do not directly affect cash flow. The most important one is depreciation.

2.3 What is net working capital?

It is the difference between current assets and current liabilities.

What is the change in net working capital?

To determine changes in net working capital you subtract uses of net working

capital from sources of net working capital.

2.4 How is cash flow different from changes in net working capital?

The difference between cash flow and changes in new working capital is that

some transactions affect cash flow and not net working capital. The acquisition of inventories with cash is a good example of a change in working capital

requirements.

What is the difference between operating cash flow and total cash flow of the firm?

The main difference between the two is capital spending and additions to working capital, that is, investment in fixed assets and "investment" in working capital.

CONCEPT QUESTIONS - CHAPTER 3

3.1 What is an int …… 此处隐藏：28957字，全部文档内容请下载后查看。喜欢就下载吧 ……