WGU D076 Finance Skills for Managers
1. What is a reasonable alternative to keeping an emergency stash o
cash?-
ANS Investing in a savings account
Investing in a readily withdrawable account that still earns some
interest is a value-preserving alternative.
2. Which area of finance deals with sources of funding and the capital struc-
ture of corporations and seeks to increase the value of a firm to its owners?
ANS - Business finance is the area of finance that deals with uses and
sources of funding to increase the value of the firm.
3. What is the primary difference between finance and accounting?
ANS Finance focuses on the future, while accounting is generally
backward-looking.
4. Which subspecialty of finance primarily involves deciding which assets
will create more wealth and earn positive returns?
ANS Investments is the area of finance that seeks to create wealth in
,the future by deciding where to allocate money.
5. What is the primary goal of the financial manager of a firm?
ANS To maximize owner wealth.
The financial manager should make decisions based on the primary
goal of maxi- mizing owner wealth.
6. What should be the main question a firm asks when considering any
invest- ment decision?
ANS Do the benefits of this investment outweigh the costs?
For any investment, you should expect to receive a benefit worth at
least as much as the initial cost.
7. What is the primary aim of personal finance goals?
ANS To maximize satisfaction from products purchased and services
obtained. The objective of personal financial goals is to maximize one's
utility.
8. Which task does a financial manager perform when choosing to obtain
a loan to purchase a piece of equipment for a new project?
ANS Making financing decisions.
The manager is deciding where to get the funds to support a new
project, which means the manager is making a financing decision.
,9. Which financial career focuses on investing capital into firms whose
shares are not currently sold on any public stock exchange?
ANS Private equity deals with investments in firms that are privately
held and whose ownership is not yet bought or sold on any public stock
exchange.
10.Which task does a financial manager perform when assessing the
costs and benefits of potential projects?
ANS Making investment decisions
Managing working capital means overseeing day-to-day operations and
cash flows.
11.What tool can you use to understand your overall personal cash flows?
ANS - Budgeting helps you to understand your income and expenses
and to analyze your cash flows.
, 12.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?
ANS Financing
Part of the personal finance process is figuring out how to finance your
goals in a way that is within your means
13.What area of finance involves deciding which assets to invest in to
create wealth in the future?
ANS Investments
Investments are an area of finance that involves deciding which assets
to invest in to create wealth in the future.
14.Hannah is the financial manager of a firm. A project that she has recom-
mended 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?
ANS Making a financing decision
Since the project has already been approved, Hannah is trying to
1. What is a reasonable alternative to keeping an emergency stash o
cash?-
ANS Investing in a savings account
Investing in a readily withdrawable account that still earns some
interest is a value-preserving alternative.
2. Which area of finance deals with sources of funding and the capital struc-
ture of corporations and seeks to increase the value of a firm to its owners?
ANS - Business finance is the area of finance that deals with uses and
sources of funding to increase the value of the firm.
3. What is the primary difference between finance and accounting?
ANS Finance focuses on the future, while accounting is generally
backward-looking.
4. Which subspecialty of finance primarily involves deciding which assets
will create more wealth and earn positive returns?
ANS Investments is the area of finance that seeks to create wealth in
,the future by deciding where to allocate money.
5. What is the primary goal of the financial manager of a firm?
ANS To maximize owner wealth.
The financial manager should make decisions based on the primary
goal of maxi- mizing owner wealth.
6. What should be the main question a firm asks when considering any
invest- ment decision?
ANS Do the benefits of this investment outweigh the costs?
For any investment, you should expect to receive a benefit worth at
least as much as the initial cost.
7. What is the primary aim of personal finance goals?
ANS To maximize satisfaction from products purchased and services
obtained. The objective of personal financial goals is to maximize one's
utility.
8. Which task does a financial manager perform when choosing to obtain
a loan to purchase a piece of equipment for a new project?
ANS Making financing decisions.
The manager is deciding where to get the funds to support a new
project, which means the manager is making a financing decision.
,9. Which financial career focuses on investing capital into firms whose
shares are not currently sold on any public stock exchange?
ANS Private equity deals with investments in firms that are privately
held and whose ownership is not yet bought or sold on any public stock
exchange.
10.Which task does a financial manager perform when assessing the
costs and benefits of potential projects?
ANS Making investment decisions
Managing working capital means overseeing day-to-day operations and
cash flows.
11.What tool can you use to understand your overall personal cash flows?
ANS - Budgeting helps you to understand your income and expenses
and to analyze your cash flows.
, 12.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?
ANS Financing
Part of the personal finance process is figuring out how to finance your
goals in a way that is within your means
13.What area of finance involves deciding which assets to invest in to
create wealth in the future?
ANS Investments
Investments are an area of finance that involves deciding which assets
to invest in to create wealth in the future.
14.Hannah is the financial manager of a firm. A project that she has recom-
mended 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?
ANS Making a financing decision
Since the project has already been approved, Hannah is trying to
