An Effective Financial System Needs

question 24

Multiple Choice

An effective financial system needs:

• A)an efficient monetary system
• B)to be able to create capital by channeling savings into investment
• C)markets in which to buy and sell claims to wealth
• D)all of the above

Understand the principal-agent problem and its implications in corporate governance.

Grasp the rationale behind corporations buying inputs from other companies or producing in-house.

Explain the advantages and challenges associated with different forms of business structures and incentive mechanisms.

Understand the concept and differences between economic and accounting profit.

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Definitions:

Tangible Assets

Physical and material assets such as machinery, buildings, and inventory, which have a value and exist physically.

Profitability

The ability of a business to earn a profit, or the degree to which its revenues exceed its expenses.

HRM Activities

Tasks and functions associated with Human Resource Management, focusing on managing people within organizations in areas such as recruitment, training, and compliance with labor laws.

Market Value

The estimated worth of a product, service, or company within the marketplace, determined by factors like supply, demand, and competition.