Overview:
• Competency: Evaluate the global financial environment.
o Explain the concept of shareholder wealth maximization.
Competency: Define finance terminology and its application within the business environment.
o Define the terms “finance” and “finance management.”
o Identify major sub-areas of finance.
o Define the forms of business ownership.
o Define the term “agency relationship.”
o Define the term “agency problem.”
Competency: Evaluate the financial health of an organization.
o Explain why ethical behavior is especially important in the field of finance.
Instructions:
Respond to the following five questions. Write your responses in a Word document, and number them 1–5.
1.Define the terms finance and financial management. What are the major sub-areas of finance?
2.Identify and define the three basic forms of business ownership. Describe the advantages and disadvantages of each.
3.Define the terms agency relationship and agency problem. Explain three different approaches to minimizing the agency problem.
4.Explain why ethical behavior is so important in the field of finance.
5.Explain the concept of shareholder wealth maximization. Is there a conflict between the goal of shareholder wealth maximization and the financial manager’s need to act in an ethical manner? Why or why not?
Use references to support your answers as needed. Be sure to cite all references using correct APA style. Responses should be free of grammar and spelling errors, demonstrating strong written communication skills.