Finance Skills for Managers - D076
Questions and Answers Rated A
Which area of finance deals with sources of funding and the capital structure of corporations and
seeks to increase the value of a firm to its owners? ✔✔Business finance
What is the primary difference between finance and accounting? ✔✔Finance focuses on the
future, while accounting is generally backward-looking.
Which subspecialty of finance primarily involves deciding which assets will create more wealth
and earn positive returns? ✔✔Investments
What is the primary goal of the financial manager of a firm? ✔✔To maximize owner wealth
What should be the main question a firm asks when considering any investment decision?
✔✔Do the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals? ✔✔To maximize satisfaction from products
purchased and services obtained
,Which task does a financial manager perform when choosing to obtain a loan to purchase a piece
of equipment for a new project? ✔✔Making financing decisions
Which financial career focuses on investing capital into firms whose shares are not currently sold
on any public stock exchange? ✔✔Private equity
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? ✔✔Making investment decisions
What tool can you use to understand your overall personal cash flows? ✔✔Budgeting
What is a reasonable alternative to keeping an emergency stash of cash? ✔✔Investing in a
savings account
You want to buy a house, so you obtain a mortgage for which you can afford the monthly
payments. What process have you engaged in as part of your financial decision-making?
✔✔Financing
,What area of finance involves deciding which assets to invest in to create wealth in the future?
✔✔Investments
Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario? ✔✔Making a financing decision
Maria and Mateo are setting financial goals. They decide that they need to save $200 each month
to reach their goal of taking their children to visit their grandparents in Spain next summer. What
is the objective of setting such a goal? ✔✔To maximize individual utility
Which professional works with individuals to help them achieve their financial goals?
✔✔Financial planner
Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he is
still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan.
In this scenario, what is Omar doing? ✔✔Financing a goal
, What are the purposes of financial markets? ✔✔To provide liquidity and determine prices
In which financial market are securities such as stocks and bonds are traded after their initial
issuance? ✔✔Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term?
✔✔Money market
A local start-up company just hit its five-year anniversary and is planning an initial public
offering sometime this year. In order to issue public stock, which market will the company use?
✔✔Primary market
What is the primary role of financial institutions? ✔✔To conduct financial transactions such as
investments, loans, and deposits
What is a depository institution? ✔✔An institution that accepts and pays interest on deposits of
money, as well as extends loans
Questions and Answers Rated A
Which area of finance deals with sources of funding and the capital structure of corporations and
seeks to increase the value of a firm to its owners? ✔✔Business finance
What is the primary difference between finance and accounting? ✔✔Finance focuses on the
future, while accounting is generally backward-looking.
Which subspecialty of finance primarily involves deciding which assets will create more wealth
and earn positive returns? ✔✔Investments
What is the primary goal of the financial manager of a firm? ✔✔To maximize owner wealth
What should be the main question a firm asks when considering any investment decision?
✔✔Do the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals? ✔✔To maximize satisfaction from products
purchased and services obtained
,Which task does a financial manager perform when choosing to obtain a loan to purchase a piece
of equipment for a new project? ✔✔Making financing decisions
Which financial career focuses on investing capital into firms whose shares are not currently sold
on any public stock exchange? ✔✔Private equity
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? ✔✔Making investment decisions
What tool can you use to understand your overall personal cash flows? ✔✔Budgeting
What is a reasonable alternative to keeping an emergency stash of cash? ✔✔Investing in a
savings account
You want to buy a house, so you obtain a mortgage for which you can afford the monthly
payments. What process have you engaged in as part of your financial decision-making?
✔✔Financing
,What area of finance involves deciding which assets to invest in to create wealth in the future?
✔✔Investments
Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario? ✔✔Making a financing decision
Maria and Mateo are setting financial goals. They decide that they need to save $200 each month
to reach their goal of taking their children to visit their grandparents in Spain next summer. What
is the objective of setting such a goal? ✔✔To maximize individual utility
Which professional works with individuals to help them achieve their financial goals?
✔✔Financial planner
Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he is
still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan.
In this scenario, what is Omar doing? ✔✔Financing a goal
, What are the purposes of financial markets? ✔✔To provide liquidity and determine prices
In which financial market are securities such as stocks and bonds are traded after their initial
issuance? ✔✔Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term?
✔✔Money market
A local start-up company just hit its five-year anniversary and is planning an initial public
offering sometime this year. In order to issue public stock, which market will the company use?
✔✔Primary market
What is the primary role of financial institutions? ✔✔To conduct financial transactions such as
investments, loans, and deposits
What is a depository institution? ✔✔An institution that accepts and pays interest on deposits of
money, as well as extends loans
