ECN 104 Study Guide - Life Insurance, Capital Structure, Financial Intermediary
12 Mar 2014
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Document Summary
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. 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. Some advantages include: limited liability, ease of transferability, ability to raise capital, unlimited life, and so forth. (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. 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.
