What is the difference between contract and agency relationships in corporate finance?
When analyzing the relationships between the different stakeholders in corporations, such as governments, customers, shareholders, bondholders, suppliers, managers, board of directors, and employees, we can find different types of relations, such as contractual or agency (principal-agent) relationships. Which of the following can be considered as an agency relationship? a) Managers vs. employees. b) Shareholders vs.
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What are the six main phases of a financial analysis, according to the CFA Institute?
Analysts work in a variety of positions within the investment management industry, and the CFA Institute establishes six phases in the process of financial analysis. Which one of these phases is responsible for creating adjusted financial statements, common-size statements, ratios and graphs? a) Collect input data. b) Process data. c) Analyze/interpret the processed data. https://vimeo.com/manage/videos/927186775
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How can we determine if a firm is facing a perfectly competitive environment or an imperfectly competitive environment?
Under profit-maximizing conditions, firms can be classified as operating in either a perfectly competitive or an imperfectly competitive environment. Which of the following sentences help us to differentiate between both environments? a) In a perfectly competitive environment, firms face a perfectly inelastic, vertical demand curve, so the firm’s MR (Marginal Revenue) and the price of
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What is the difference between a firm commitment and a contingent claim?
When dealing with derivatives, we classify them into contingent claims and firm commitments. Which of the following sentences better represent the difference between them? a) Firm commitments can be used to take either a long or a short position. Futures and options are examples of firm commitments. b) In a firm commitment, both counterparties face
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What is the difference between money markets and capital markets?
When dealing with fixed-income securities, we can classify them as money market or capital market securities. Mark the correct sentence regarding this classification. a) Treasury bills, commercial paper, consols, and certificates of deposits are classified as money market instruments. b) The difference between money markets and capital markets depends on maturity as of today. c)
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What is the difference between the inflation premium and the inflation rate?
Which of the following sentences better represent the difference between the inflation rate and the inflation premium? a) The inflation premium is an extra return that compensates investors for expected inflation. b) The inflation premium is monitored by central banks and it impacts the real value of money over time. c) The inflation rate
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