Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
15th Edition
ISBN: 9780134476315
Author: Chad J. Zutter, Scott B. Smart
Publisher: PEARSON
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Question
Chapter 8, Problem 8.31P
Summary Introduction
To discuss:
Ethics problem
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Question 19, P1-12
One of the key risk areas that corporates need to manage is "ethical risks." Do you think that management of ethical risks is as important for business as management of financial risks? Explain how ethical problems may affect a firm's profits and stock price.
11. Which of the following security holders receives a
lower returns with low risk?
. T-Bill B. Common shareholders C. Stakeholders D.
Creditors
12. The advantage of a company compared a sole trader
as form of business organisation is:
A. Quick decision making B. Access to external
professional management skills C. Use of own funds D.
Inability to access external funds
Thank you!!!
When venture capitalists take an active role in the
management of a company they finance, they are
trying to alleviate the moral hazard problem.
Group of answer choices
True
False
Chapter 8 Solutions
Gitman: Principl Manageri Finance_15 (15th Edition) (What's New in Finance)
Ch. 8.1 - What is risk in the context of financial decision...Ch. 8.1 - Prob. 8.2RQCh. 8.1 - Compare the following risk preferences: (a) risk...Ch. 8.2 - Explain how the range is used in scenario...Ch. 8.2 - Prob. 8.5RQCh. 8.2 - Prob. 8.6RQCh. 8.2 - What does the coefficient of variation reveal...Ch. 8.3 - What is an efficient portfolio? How can the return...Ch. 8.3 - Prob. 8.9RQCh. 8.3 - How does international diversification enhance...
Ch. 8.4 - Prob. 8.11RQCh. 8.4 - Prob. 8.12RQCh. 8.4 - Prob. 8.13RQCh. 8.4 - What impact would the following changes have on...Ch. 8 - Prob. 1ORCh. 8 - Prob. 8.1STPCh. 8 - Prob. 8.2STPCh. 8 - Prob. 8.1WUECh. 8 - Prob. 8.2WUECh. 8 - Prob. 8.3WUECh. 8 - Prob. 8.4WUECh. 8 - Prob. 8.5WUECh. 8 - Prob. 8.6WUECh. 8 - Prob. 8.1PCh. 8 - Prob. 8.2PCh. 8 - Prob. 8.3PCh. 8 - Prob. 8.4PCh. 8 - Prob. 8.5PCh. 8 - Learning Goal 2 P8-6 Bar charts and risk Swans...Ch. 8 - Prob. 8.7PCh. 8 - Prob. 8.8PCh. 8 - Prob. 8.9PCh. 8 - Prob. 8.10PCh. 8 - Prob. 8.11PCh. 8 - Prob. 8.12PCh. 8 - Prob. 8.13PCh. 8 - Prob. 8.14PCh. 8 - Learning Goal 4 P8- 15 Correlation, risk, and...Ch. 8 - Prob. 8.16PCh. 8 - Learning Goal 5 P8- 17 Total, nondiversifiable,...Ch. 8 - Prob. 8.18PCh. 8 - Prob. 8.19PCh. 8 - Prob. 8.20PCh. 8 - Prob. 8.21PCh. 8 - Prob. 8.22PCh. 8 - Prob. 8.23PCh. 8 - Prob. 8.24PCh. 8 - Prob. 8.25PCh. 8 - Prob. 8.26PCh. 8 - Prob. 8.27PCh. 8 - Learning Goal 6 P8- 28 Security market line (SML)...Ch. 8 - Prob. 8.29PCh. 8 - Prob. 8.30PCh. 8 - Prob. 8.31PCh. 8 - Spreadsheet Exercise Jane is considering investing...
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- 1. What are the main differences between individual investors and professional money managers? 2. What are the qualities of a great organizational culture? Give at least 5. Discuss. 3. What are the four (4) types of Organizational Culture? Cite the advantages and disadvantages.arrow_forwardQUESTION THREE Discuss how interest rate swaps and currency swaps might be of value to the corporate financial manager. b) Risk management is concerned with understanding and managing the risks that an organization faces in its attempt to achieve its objectives. These risks will often represent threats to the organization – such as the risk of heavy losses or even bankruptcy. Risk management has traditionally associated itself with managing the risks of events that would damage the organization.Organizations face many different types of risks including financial risk, financial risks relate to the financial operation of a business– in essence, the risk of financial loss (and in some cases, financial gain) – and take many different forms. These include currency risks, interest rate risks, credit risks, liquidity risks, cash flow risk, and financing risks. The importance of these risks will vary from one organization…arrow_forwardAnalysis on the Role of Financial Management Milton Friedman has once popularly said "The social responsibility of business is to increase its profits; here is one and only one social responsibility of business to use its resources and engage in activities designed to increase its profits so long as it stays in the rules of the game, which is to say, engages in open and free competition, without deception or fraud." Do you agree or disagree with Friedman's arguments? Please provide your thoughts by considering the goals of Financial management.arrow_forward
- Financial managers shouldconsider this when.improving thefinancials of the firm A. that the overall goal is the maximization of the market value of the equity through improved income and cashflows.B. that cost minimization is the primary concern of the firm.C. that exposing the firm to the most risk for the most return should be priority.D. that the personal goals of customer and employees are above the goals of the shareholders.arrow_forwardCHAPTER SUMMARY Ethical issues in finance are important because they bear on our financial well-being. Ethical misconduct, whether it be by individuals acting alone or by financial institutions, has the potential to rob people of their life savings. Because so much money is involved in financial dealings, there must be well-developed and effective safeguards in place to ensure personal and organizational ethics. Although the law governs much financial activity, strong emphasis must be placed on the integrity of finance professionals and on ethical leadership in our financial institutions. Some of the principles in finance ethics are common to other aspects of business, especially the duties of fiduciaries and fairness in sales practices and securities markets. However, such activities as insider trading and hostile takeovers raise unique issues that require special consideration. Insider trading is prohibited because it involves trading of information not publicly available or…arrow_forwardQ8) what do you understand by Financial management? Explain scope of financial management in your aspect if you are staring a new setup? What is wealth maximization vs. profit maximization? Which is more effective for you? Part II) what is working capital? Why do you think it is important in an organization? What is cash how is it managed suggest your idea about how to manage it? What is financial statement and what it reflects and why is it important? W 14 f6 fg fg 10 $ % & 18arrow_forward
- Tutorial Questions Explain to John, your mentor, the primary goal of the organization? Your manager is requesting you to provide an explanation to the question. Would the role of a financial manager be likely to increase or decrease in importance if the rate of inflation increased? What is the difference between stock price maximization and profit maximization? What are the three principal forms of business organization? What are the advantages and disadvantages of each? What mechanisms exist to influence managers to act in shareholders’ best interests? What is an agency relationship? What agency relationships exist within a corporation? What are financial intermediaries, and what economic functions do they perform? How does an efficient capital market help to reduce the prices of goods and services? What is the term structure of interest rates? What is a yield curve? How should users and savers of…arrow_forwardQ8) what do you understand by Financial management? Explain scope of financial management in your aspect if you are staring a new setup? What is wealth maximization vs. profit maximization? Which is more effective for you? Part II) what is working capital? Why do you think it is important in an organization? What is cash how is it managed suggest your idea about how to manage it? What is financial statement and what it reflects and why is it important? 6困 & 7 9. 5arrow_forwardmahi ig makipag kwentuhan o siKReto na iba. 13 Nature, Purpose and Scope of Financial Management 15. Besides maximizing the wealth of the firm, what are some of the other goals of financial management? Multiple Choice Questions What is the primary goal of financial management? Increase earnings Maximizing cash flow Maximizing shareholders' wealth d. 1. a. b. bal с. Minimizing risk of the firm xal Proper-risk return management means that the firm should take as few risks as possible. 2. a. b. consistent with the objectives of the firm, an appropriate trade- off between risk and return should be determined. the firm should earn highest return possible. the firm should value future profits more highly than current profits. с. d. Which of the following is not a major area of concern and emphasis in modern financial management? Inflation and its effect on profits Stable short-term interest rates 3. a. b. C. Changing international environment d. Increased reliance on debt Which of the…arrow_forward
- We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example, the manager might: Make shareholders as wealthy as possible by investing in real assets. Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption. Choose high- or low-risk assets to match shareholders' risk preferences. Help balance shareholders' checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?arrow_forwardProvide real-world example of an organization you are familiar with employing financial investment strategies with attention to mitigating riskarrow_forwarddiscuss four ethical issues found in the finance industry and responsible investing as a way to reduce unethical behaviours.arrow_forward
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