According to the statement of ﬁnancial position model of the ﬁrm, corporate ﬁnance can be thought of as an analysis of three primary subject areas. Which of the following correctly lists these areas?
A) Capital structure, capital budgeting, security analysis.
B) Capital budgeting, capital structure, capital spending.
C) Capital budgeting, capital structure, net working capital.
D) Capital structure, net working capital, capital rationing.
E) Capital budgeting, capital spending, net working capital.

Question

Quizplus · Accepted Answer

The three primary subject areas of corporate finance according to the statement of financial position model of the firm are capital budgeting, capital structure, and net working capital. Choice A is incorrect because security analysis is not one of the primary subject areas listed. Choice B is incorrect because capital spending is not a primary subject area, and it also wrongly orders capital structure before capital budgeting. Choice D is incorrect because it lists net working capital before capital structure, and capital rationing is not one of the primary subject areas listed. Choice E is incorrect because it lists capital spending instead of capital structure.

According to the Statement of ﬁNancial Position Model of the ﬁRm