WGU C214 Financial Management Topic 1 Questions and Answers(A+ Solution guide)

Corporate Finance - focuses on financial decision making by a firms management Investments - various types of financial instruments (stocks, bonds, etc) Banking or Financial Institutions - make money by paying depositors a smaller interest rate than the interest rate charged to borrowers Treasury Securities - generally bonds that are issued by the US government Corporate Bonds - firms borrowing from the public Stocks - a share of ownership in a company Primary financial markets - markets where securities are first issued Syndicate - a group that is temporarily formed to handle a bond or stock issue: generally large investment bank or institutional investors Underwriter - responsible for determining the value of the security; may purchase all the securities & then resale to investors Competitive sale - underwriters submit bids offering highest price/lowest interest rate; underwriter resales a slightly higher price Negotiated sale - underwriters submit bids, go thru interview to be selectedInitial Public Offering (IPO) - first time selling of stocks to the public; occurs in primary market Secondary financial markets - where securities are traded after the initial offering (stock market) Auction market - has a physical location & prices are determined by the highest price an investor is willing to pay (New York Stock Exchange)