WGU D076 FINANCE SKILLS FOR MANAGERS 2025
• Finance – The study of managing and allocating funds at the personal or
business level. Finance is forward-looking or focuses primarily on the
future.
• Capital – A financial asset that can be used by a firm or individual.
Examples of capital may be machinery or cash held by a firm.
• There are three primary areas in the world of finance:
1. Business finance – Deals with sources of funding, the capital structure
of corporations, the actions managers take to increase the value of a
firm for its owners, and the tools and analysis used to allocate
financial resources.
2. Investments – Deciding which assets to invest in to create wealth in
the future. Another major sub-discipline of investments is asset
pricing.
3. Financial institutions – firms or organizations that exist to accept a
wide variety of deposits, offer investment products to individuals and
businesses, to provide loans, or to broker financial transactions.
• Utility – the total satisfaction received from consuming goods and
services
• The financial manager of a firm acts on behalf of the owners by
managing the investing and financing functions to achieve the goal of
the firm. The goal is to maximize shareholder wealth for publicly
traded firms or to maximize owner wealth for privately held
companies.
• The financial manager of a firm has three main tasks:
1. Making investment decisions – the most important. The financial
manager assesses the costs and benefits of each of the potential
, investments in order to wisely use the money that the shareholders
have invested in the firm.
2. Making financial decisions. If the investments are large, the firm
may need to issue new stocks (equity) or new bonds (debt) to raise
capital to finance.
3. Managing working capital. Needs to manage cash to pay the firm’s
suppliers and many other day-to-day operations by setting its credit
standards for the customers, discussing inventories with the supply
chain manager (inventory control) and so on.
• At the heart of financial analysis inside of firms are the investing and
financing decisions, cash management, tax strategies, and financial
policy implementation.
• Venture capitalists (VCs) – professional managers of investment
capital that typically invest in very young (startup) ventures.
• Harvest – an opportunity for shareholders to receive a return on their
investment, typically through an initial public offering (IPO) on a public
stock exchange or through a buyout (acquisition) by another firm or
financial institution.
• Credit analysts – assess the riskiness of lending to borrowers and
determining whether loans should be extended to potential bank
clients.
• Liquidity means that investors can turn their financial securities into
cash easily without losing significant value
• Financial securities:
1. Treasury securities (Treasuries) – bonds that are issued by the US
government. When tax revenues fall short of covering various
projects and other governmental costs, the US treasury will issue
bonds.
2. Corporate Bonds – issued by corporations to borrow money from
the public to cover the costs of investment in new projects.
2
, 3. Stocks – a stock is a share of ownership in a company.
• Money Market – type of financial market that government and
corporate entities use to borrow and lend money in short term.
• Capital Markets – more often used for long-term assets that are held
for greater than one year.
• Primary market – the financial market where securities (stocks and/or
bonds are first sold.
• Syndicate – a group that is temporarily formed to handle a bond or
stock issue. They are generally made up of large investment banks or
other types of institutional investors.
• Initial public offering (IPO) – when a privately held company first offers
shares of stock to outside investors to raise capital, therefore
becoming a publicly owned company.
• Secondary market – for stocks is commonly referred to as the stock
market. These are markets where assets are priced.
A. There are two types of secondary markets:
1. Auction market – a secondary market with a physical location
and where prices are determined by investors’ willingness to
pay. (Ex: The New York Stock Exchange (NYSE).
2. Dealer market – A Secondary market made up of multiple
dealers that hold an inventory of securities and quote prices.
(Ex: NASDAQ)
• Specialist – a market maker on the NYSE that holds an inventory on
securities and acts as a liquidity provider to those that wish to buy and
sell.
• Bid-ask spread – the difference between the bid and ask prices that
compensate the specialists for the risk that he or she bears for
willingness to provide liquidity.
• Efficient market – one where prices fully reflect the available
information about specific security. Markets that are inefficient have
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• Finance – The study of managing and allocating funds at the personal or
business level. Finance is forward-looking or focuses primarily on the
future.
• Capital – A financial asset that can be used by a firm or individual.
Examples of capital may be machinery or cash held by a firm.
• There are three primary areas in the world of finance:
1. Business finance – Deals with sources of funding, the capital structure
of corporations, the actions managers take to increase the value of a
firm for its owners, and the tools and analysis used to allocate
financial resources.
2. Investments – Deciding which assets to invest in to create wealth in
the future. Another major sub-discipline of investments is asset
pricing.
3. Financial institutions – firms or organizations that exist to accept a
wide variety of deposits, offer investment products to individuals and
businesses, to provide loans, or to broker financial transactions.
• Utility – the total satisfaction received from consuming goods and
services
• The financial manager of a firm acts on behalf of the owners by
managing the investing and financing functions to achieve the goal of
the firm. The goal is to maximize shareholder wealth for publicly
traded firms or to maximize owner wealth for privately held
companies.
• The financial manager of a firm has three main tasks:
1. Making investment decisions – the most important. The financial
manager assesses the costs and benefits of each of the potential
, investments in order to wisely use the money that the shareholders
have invested in the firm.
2. Making financial decisions. If the investments are large, the firm
may need to issue new stocks (equity) or new bonds (debt) to raise
capital to finance.
3. Managing working capital. Needs to manage cash to pay the firm’s
suppliers and many other day-to-day operations by setting its credit
standards for the customers, discussing inventories with the supply
chain manager (inventory control) and so on.
• At the heart of financial analysis inside of firms are the investing and
financing decisions, cash management, tax strategies, and financial
policy implementation.
• Venture capitalists (VCs) – professional managers of investment
capital that typically invest in very young (startup) ventures.
• Harvest – an opportunity for shareholders to receive a return on their
investment, typically through an initial public offering (IPO) on a public
stock exchange or through a buyout (acquisition) by another firm or
financial institution.
• Credit analysts – assess the riskiness of lending to borrowers and
determining whether loans should be extended to potential bank
clients.
• Liquidity means that investors can turn their financial securities into
cash easily without losing significant value
• Financial securities:
1. Treasury securities (Treasuries) – bonds that are issued by the US
government. When tax revenues fall short of covering various
projects and other governmental costs, the US treasury will issue
bonds.
2. Corporate Bonds – issued by corporations to borrow money from
the public to cover the costs of investment in new projects.
2
, 3. Stocks – a stock is a share of ownership in a company.
• Money Market – type of financial market that government and
corporate entities use to borrow and lend money in short term.
• Capital Markets – more often used for long-term assets that are held
for greater than one year.
• Primary market – the financial market where securities (stocks and/or
bonds are first sold.
• Syndicate – a group that is temporarily formed to handle a bond or
stock issue. They are generally made up of large investment banks or
other types of institutional investors.
• Initial public offering (IPO) – when a privately held company first offers
shares of stock to outside investors to raise capital, therefore
becoming a publicly owned company.
• Secondary market – for stocks is commonly referred to as the stock
market. These are markets where assets are priced.
A. There are two types of secondary markets:
1. Auction market – a secondary market with a physical location
and where prices are determined by investors’ willingness to
pay. (Ex: The New York Stock Exchange (NYSE).
2. Dealer market – A Secondary market made up of multiple
dealers that hold an inventory of securities and quote prices.
(Ex: NASDAQ)
• Specialist – a market maker on the NYSE that holds an inventory on
securities and acts as a liquidity provider to those that wish to buy and
sell.
• Bid-ask spread – the difference between the bid and ask prices that
compensate the specialists for the risk that he or she bears for
willingness to provide liquidity.
• Efficient market – one where prices fully reflect the available
information about specific security. Markets that are inefficient have
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