Answer the questions below in your own words. A verbatim answer coming from the notes/slides will not be given points. Answers must be in a paragraph form and must be composed of at least 5 to 8 sentences.

1. Majority of owners of a corporation are normally distinct from its managers. Nevertheless, managers are entrusted to only take actions or make decisions that are in the best interests of the firm’s owners, its shareholders. However, in most cases, managers fail to act on the behalf of the shareholders. Explain in detail the occurrence of agency problem and the measures used to mitigate it.(5 marks)

2.Managerial Finance is usually considered a fusion of Managerial Accounting and Corporate Finance. This may be due to the fact that Managerial Finance borrows some of its principles from both accounting and economics. Discuss the relationship of Managerial Finance to Accounting and Economics. (5 marks)

3. Most Corporations can raise funding either though debt or equity or combination of both. The proper appropriate identification of such funding would create massive effect on the goal of the organization to maximize the shareholders wealth. Distinguish between equity and debt financing in terms of their advantages and disadvantages.(5 marks)

4. Financial institutions and financial markets play an important role in allowing corporations to secure external source of financing. Describe in detail, the similarities and differences of Capital market and Money Market.

Answer rating: 100% (QA)

1 Explain in detail the occurrence of agency problem and the measures used to mitigate it The agency problem can be better defined as a conflict taking place when the agents who are entrusted with the ... View the full answer