D076 Finance Skills Review/Study Guide
Finance - ✔✔the study of managing and allocating funds at the personal or business level; forward
looking
What are the subspecialties of finance? - ✔✔business finance, investments, and financial institutions
Corporate finance - ✔✔an area of finance that involves activities used to increase shareholder wealth
Investments - ✔✔an area of finance that deals with investment allocation and asset pricing
financial institutions - ✔✔an area of finance that involves organizations that accept deposits, offer
investment products, loan money, or broker financial transactions
accounting - ✔✔the system of recording, reporting, and summarizing past financial information and
transactions; backward looking
What is the goal of business finance? - ✔✔to maximize owner wealth for a privately held company and
to maximize shareholder wealth for a publicly held company
What are the goals of personal finance? - ✔✔maximize an individual's utility
What main tasks does a financial manager complete? - ✔✔making investment decisions, making
financing decisions, and managing working capital
Investment decisions are made based on what? - ✔✔costs and benefits of potential projects in
achieving the goal of a firm
, After investment decisions are made who decides how to finance such projects? - ✔✔financial
manager
Different areas in the field of finance: - ✔✔corporate finance, investment banking, private equity,
commercial banking, financial planning, insurance, and real estate
Financial managers need to pay attention to 1. long term obligations or 2 short term obligations? - ✔✔
2. short-term obligations
What role does finance play in personal decision making? - ✔✔understanding the management and
allocation of money in your personal life is critical for making smart financial decisions
Budgeting and investing are... - ✔✔tools to help us achieve our financial goals
What is the purpose of financial markets? - ✔✔to determine the market price of financial securities
based on supply and demand and to provide liquidity
The money market is for short-term or long-term borrowing and lending? - ✔✔short-term
Capital market is for short-term or long-term borrowing and lending? - ✔✔long-term
Primary market - ✔✔where companies sell their financial securities to raise capital; initial issuance of
the stocks and bonds
secondary market - ✔✔where securities are traded after the initial issuance; commonly referred to as
the stock market
Finance - ✔✔the study of managing and allocating funds at the personal or business level; forward
looking
What are the subspecialties of finance? - ✔✔business finance, investments, and financial institutions
Corporate finance - ✔✔an area of finance that involves activities used to increase shareholder wealth
Investments - ✔✔an area of finance that deals with investment allocation and asset pricing
financial institutions - ✔✔an area of finance that involves organizations that accept deposits, offer
investment products, loan money, or broker financial transactions
accounting - ✔✔the system of recording, reporting, and summarizing past financial information and
transactions; backward looking
What is the goal of business finance? - ✔✔to maximize owner wealth for a privately held company and
to maximize shareholder wealth for a publicly held company
What are the goals of personal finance? - ✔✔maximize an individual's utility
What main tasks does a financial manager complete? - ✔✔making investment decisions, making
financing decisions, and managing working capital
Investment decisions are made based on what? - ✔✔costs and benefits of potential projects in
achieving the goal of a firm
, After investment decisions are made who decides how to finance such projects? - ✔✔financial
manager
Different areas in the field of finance: - ✔✔corporate finance, investment banking, private equity,
commercial banking, financial planning, insurance, and real estate
Financial managers need to pay attention to 1. long term obligations or 2 short term obligations? - ✔✔
2. short-term obligations
What role does finance play in personal decision making? - ✔✔understanding the management and
allocation of money in your personal life is critical for making smart financial decisions
Budgeting and investing are... - ✔✔tools to help us achieve our financial goals
What is the purpose of financial markets? - ✔✔to determine the market price of financial securities
based on supply and demand and to provide liquidity
The money market is for short-term or long-term borrowing and lending? - ✔✔short-term
Capital market is for short-term or long-term borrowing and lending? - ✔✔long-term
Primary market - ✔✔where companies sell their financial securities to raise capital; initial issuance of
the stocks and bonds
secondary market - ✔✔where securities are traded after the initial issuance; commonly referred to as
the stock market
