FINANCE SKILLS FOR MANAGERS D076 STUDY QUESTIONS WITH
CORRECT ANSWERS GUARANTEED PASS | RATED A+
Steady State Growth - Answer>>> The level of growth where four key financial ratios-
profitability, asset utilization, leverage, and payout - are constant and where the firm does need
to issue any new equity to fund the growth.
Credit Analysts - Answer>>> A commercial bank position with the responsibility to assess the
riskiness of lending to borrowers and determining whether or not loans should be extended to
potential bank clients.
Stock - Answer>>> A share of ownership in a company
Sunk Costs - Answer>>> A cost that has already been incurred and cannot be recovered
The Federal Reserve sometimes adjusts the interest rate at which commercial banks can borrow
from it. What is the purpose of adjusting the interest rate? - Answer>>> To regulate inflation and
unemployment
What would an inverted yield curve signal? - Answer>>> It may indicate an economic downturn.
In what way are coincident indicators useful? - Answer>>> They are analyzed during economic
shifts to provide information about the current state of the economy.
Sustainable Growth Rate (SGR) - Answer>>> The growth rate that allows a firm to maintain its
presents financial ratios without issuing new equity
About a year ago, the short-term Treasury bill had 1.54% interest and the long-term Treasury
note had 2.54% interest. This week, the 1-year Treasury bill has an interest rate of 3.13%, while
the 10-year Treasury note has an interest rate of 2.28%. What does this information indicate
about the future economy? - Answer>>> It may indicate an economic downturn.
Which term reflects a person's beliefs about right and wrong, good and bad, or just and unjust? -
Answer>>> Moral
What characterizes an ethical action? - Answer>>> An ethical action is based on accepted
standards of conduct.
,Lucas is a financial advisor working for Bullzai, Inc. He is faced with a dilemma. Bullzai has
started changing its practices in order to increase profit. As a financial advisor, he is now
supposed to suggest to clients to invest in portfolios that will not do as well as the portfolios that
Bullzai is invested in. This is an accepted practice done by other businesses in the industry, and it
complies with all standards set by the government. However, Lucas knows that this practice is
not in his clients' best interest. What type of dilemma is Lucas facing? - Answer>>> Moral
Syndicate - Answer>>> A group of intermediaries that is used to oversee the issuance of stocks
and/ or bonds
Systematic Risk - Answer>>> Risk that is inherent in the economy as a whole and cannot be
diversified away; also called market risk or nondiversifiable risk
Tax Strategies - Answer>>> Methods used to minimize the amount of taxes a business pays
Teller - Answer>>> An entry-level commercial bank position with the responsibility to interact
with customers at the bank's front desk or drive-through window.
Time Value of Money (TVM) - Answer>>> The idea that money that is available at the present
time is worth more than the same amount in the future.
Times Interest Earned (TIE) - Answer>>> A financing ratio found by EBIT divided by interest
expenses
Total Asset Turnover (TAT) - Answer>>> An activity ratio found by sales divided by total assets
Treasury Bill - Answer>>> A bill issued by the U.S. government as a financial security with no
interest and a maturity of less than one year; abbreviated T-bill
Treasury Note - Answer>>> A note issued by the U.S. government as a financial security with a
fixed interest rate and a short maturity between 1 and 10 years; abbreviated T-note
Treasury Securities - Answer>>> A debt instrument (bond) that is issued by the United States
government in order to raise capital
Trend Analysis - Answer>>> Comparing a firm's ratios across time
Trusts - Answer>>> An arrangement that allows a third party to hold assets on behalf of a
beneficiary or beneficiaries
,U.S Securities and Exchange Commission (SEC) - Answer>>> An independent federal
government agency that (1) protects investors, (2) maintains fair, orderly, and efficient markets,
and (3) facilitates capital formation.
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? - Answer>>> 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? - Answer>>> To maximize individual utility
Which professional works with individuals to help them achieve their financial goals? -
Answer>>> 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? - Answer>>> Financing a goal
What are the purposes of financial markets? - Answer>>> To provide liquidity and determine
prices
In which financial market are securities such as stocks and bonds are traded after their initial
issuance? - Answer>>> Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term? -
Answer>>> 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? -
Answer>>> Primary market
, What is the primary role of financial institutions? - Answer>>> To conduct financial transactions
such as investments, loans, and deposits
What is a depository institution? - Answer>>> An institution that accepts and pays interest on
deposits of money, as well as extends loans
Which financial institution ensures that a nation's economy remains healthy by controlling the
amount of money circulating in the economy? - Answer>>> Central bank
How do insurance companies pay policyholders when a claim is made? - Answer>>> They use
returns from stocks and bonds.
Which type of financial institution deals mainly with providing for retirement through
employers? - Answer>>> Pension fund
A large corporation is looking to merge with another large corporation. Which financial
institution can help them do this? - Answer>>> Investment bank
Unemployment rate is which type of economic indicator? - Answer>>> Lagging
Which responsibility is a focus of the U.S. Securities and Exchange Commission? - Answer>>>
To protect investors
Which type of financial institution provides individuals and firms access to financial markets? -
Answer>>> Investment institutions
Which financial institution includes entities that receive money from institutional investors and
wealthy individuals to buy troubled companies to improve them and earn returns by selling them
or going public? - Answer>>> Private equity
Yield curve is which type of economic indicator? - Answer>>> Leading
Which type of error would result in a set repercussion or penalty given by the government? -
Answer>>> Legal
Nora is an investment manager, which means that she is paid to invest other people's money. To
meet her goal for the month, she is seeking to invest money from clients in an investment that is
risky but potentially has a higher return. What about this situation represents an ethical dilemma?
- Answer>>> Nora is considering investing in a risky asset just to meet her monthly goal.
CORRECT ANSWERS GUARANTEED PASS | RATED A+
Steady State Growth - Answer>>> The level of growth where four key financial ratios-
profitability, asset utilization, leverage, and payout - are constant and where the firm does need
to issue any new equity to fund the growth.
Credit Analysts - Answer>>> A commercial bank position with the responsibility to assess the
riskiness of lending to borrowers and determining whether or not loans should be extended to
potential bank clients.
Stock - Answer>>> A share of ownership in a company
Sunk Costs - Answer>>> A cost that has already been incurred and cannot be recovered
The Federal Reserve sometimes adjusts the interest rate at which commercial banks can borrow
from it. What is the purpose of adjusting the interest rate? - Answer>>> To regulate inflation and
unemployment
What would an inverted yield curve signal? - Answer>>> It may indicate an economic downturn.
In what way are coincident indicators useful? - Answer>>> They are analyzed during economic
shifts to provide information about the current state of the economy.
Sustainable Growth Rate (SGR) - Answer>>> The growth rate that allows a firm to maintain its
presents financial ratios without issuing new equity
About a year ago, the short-term Treasury bill had 1.54% interest and the long-term Treasury
note had 2.54% interest. This week, the 1-year Treasury bill has an interest rate of 3.13%, while
the 10-year Treasury note has an interest rate of 2.28%. What does this information indicate
about the future economy? - Answer>>> It may indicate an economic downturn.
Which term reflects a person's beliefs about right and wrong, good and bad, or just and unjust? -
Answer>>> Moral
What characterizes an ethical action? - Answer>>> An ethical action is based on accepted
standards of conduct.
,Lucas is a financial advisor working for Bullzai, Inc. He is faced with a dilemma. Bullzai has
started changing its practices in order to increase profit. As a financial advisor, he is now
supposed to suggest to clients to invest in portfolios that will not do as well as the portfolios that
Bullzai is invested in. This is an accepted practice done by other businesses in the industry, and it
complies with all standards set by the government. However, Lucas knows that this practice is
not in his clients' best interest. What type of dilemma is Lucas facing? - Answer>>> Moral
Syndicate - Answer>>> A group of intermediaries that is used to oversee the issuance of stocks
and/ or bonds
Systematic Risk - Answer>>> Risk that is inherent in the economy as a whole and cannot be
diversified away; also called market risk or nondiversifiable risk
Tax Strategies - Answer>>> Methods used to minimize the amount of taxes a business pays
Teller - Answer>>> An entry-level commercial bank position with the responsibility to interact
with customers at the bank's front desk or drive-through window.
Time Value of Money (TVM) - Answer>>> The idea that money that is available at the present
time is worth more than the same amount in the future.
Times Interest Earned (TIE) - Answer>>> A financing ratio found by EBIT divided by interest
expenses
Total Asset Turnover (TAT) - Answer>>> An activity ratio found by sales divided by total assets
Treasury Bill - Answer>>> A bill issued by the U.S. government as a financial security with no
interest and a maturity of less than one year; abbreviated T-bill
Treasury Note - Answer>>> A note issued by the U.S. government as a financial security with a
fixed interest rate and a short maturity between 1 and 10 years; abbreviated T-note
Treasury Securities - Answer>>> A debt instrument (bond) that is issued by the United States
government in order to raise capital
Trend Analysis - Answer>>> Comparing a firm's ratios across time
Trusts - Answer>>> An arrangement that allows a third party to hold assets on behalf of a
beneficiary or beneficiaries
,U.S Securities and Exchange Commission (SEC) - Answer>>> An independent federal
government agency that (1) protects investors, (2) maintains fair, orderly, and efficient markets,
and (3) facilitates capital formation.
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? - Answer>>> 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? - Answer>>> To maximize individual utility
Which professional works with individuals to help them achieve their financial goals? -
Answer>>> 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? - Answer>>> Financing a goal
What are the purposes of financial markets? - Answer>>> To provide liquidity and determine
prices
In which financial market are securities such as stocks and bonds are traded after their initial
issuance? - Answer>>> Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term? -
Answer>>> 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? -
Answer>>> Primary market
, What is the primary role of financial institutions? - Answer>>> To conduct financial transactions
such as investments, loans, and deposits
What is a depository institution? - Answer>>> An institution that accepts and pays interest on
deposits of money, as well as extends loans
Which financial institution ensures that a nation's economy remains healthy by controlling the
amount of money circulating in the economy? - Answer>>> Central bank
How do insurance companies pay policyholders when a claim is made? - Answer>>> They use
returns from stocks and bonds.
Which type of financial institution deals mainly with providing for retirement through
employers? - Answer>>> Pension fund
A large corporation is looking to merge with another large corporation. Which financial
institution can help them do this? - Answer>>> Investment bank
Unemployment rate is which type of economic indicator? - Answer>>> Lagging
Which responsibility is a focus of the U.S. Securities and Exchange Commission? - Answer>>>
To protect investors
Which type of financial institution provides individuals and firms access to financial markets? -
Answer>>> Investment institutions
Which financial institution includes entities that receive money from institutional investors and
wealthy individuals to buy troubled companies to improve them and earn returns by selling them
or going public? - Answer>>> Private equity
Yield curve is which type of economic indicator? - Answer>>> Leading
Which type of error would result in a set repercussion or penalty given by the government? -
Answer>>> Legal
Nora is an investment manager, which means that she is paid to invest other people's money. To
meet her goal for the month, she is seeking to invest money from clients in an investment that is
risky but potentially has a higher return. What about this situation represents an ethical dilemma?
- Answer>>> Nora is considering investing in a risky asset just to meet her monthly goal.
