Study Guides (238,528)
Canada (115,195)
Business (294)
BUSI 2504 (24)


2 Pages
Unlock Document

Carleton University
BUSI 2504
Robert Riordan

CHAPTER 1 INTRODUCTION TO CORPORATE FINANCE Learning Objectives LO1 The basic types of financial management decisions and the role of the financial manager. LO2 The financial implications of the different forms of business organization. LO3 The goal of financial management. LO4 The conflicts of interests that can arise between managers and owners. LO5 The roles of financial institutions and markets. Answers to Concepts Review and Critical Thinking Questions 2. (LO2) Disadvantages: unlimited liability, limited life, difficulty in transferring ownership, hard to raise capital funds. Some advantages: simpler, less regulation, the owners are also the managers, sometimes personal tax rates are better than corporate tax rates. 4. (LO4) The treasurer’s office and the controller’s office are the two primary organizational groups that report directly to the chief financial officer. The controller’s office handles cost and financial accounting, tax management, and management information systems, while the treasurer’s office is responsible for cash and credit management, capital budgeting, and financial planning. Therefore, the study of corporate finance is concentrated within the treasury group’s functions. 6. (LO4) In the corporate form of ownership, the shareholders are the owners of the firm. The shareholders elect the directors of the corporation, who in turn appoint the firm’s management. This separation of ownership from control in the corporate form of organization is what causes agency problems to exist. Management may act in its own or someone else’s best interests, rather than those of the shareholders. If such events occur, they may contradict the goal of maximizing the share price of the equity of the firm. 8. (LO5) In auction markets like the Toronto Stock Exchange (TSX), brokers and agents meet at a central location (the exchange) to match buyers and sellers of assets. Physical locations for stock markets are disappearing as trading becomes more electronic. Dealer markets like Nasdaq consist of dealers operating at dispersed locales who buy and sell assets themselves, communicating with other dealers either electronically or literally over-the-counter. Dealer
More Less

Related notes for BUSI 2504

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.