D076 Finance Skills for Managers
EXAMS 100%
Which area of finance deals with sources of funding and the capital structure of corporations and seeks
to increase the value of a firm to its owners? - ✔✔✔Business finance
What is the primary difference between finance and accounting? - ✔✔✔Finance focuses on the future,
while accounting is generally backward-looking.
Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn
positive returns? - ✔✔✔Investments
What is the primary goal of the financial manager of a firm? - ✔✔✔To maximize owner wealth
What should be the main question a firm asks when considering any investment decision? - ✔✔✔Do
the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals? - ✔✔✔To maximize satisfaction from products
purchased and services obtained
Which task does a financial manager perform when choosing to obtain a loan to purchase a piece of
equipment for a new project? - ✔✔✔Making financing decisions
Which financial career focuses on investing capital into firms whose shares are not currently sold on any
public stock exchange? - ✔✔✔Private equity
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? - ✔✔✔Making investment decisions
,What tool can you use to understand your overall personal cash flows? - ✔✔✔Budgeting
What is a reasonable alternative to keeping an emergency stash of cash? - ✔✔✔Investing in a savings
account
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? - ✔✔✔Financing
What area of finance involves deciding which assets to invest in to create wealth in the future? - ✔✔✔
Investments
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? - ✔✔✔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? - ✔✔✔To maximize individual utility
Which professional works with individuals to help them achieve their financial goals? - ✔✔✔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? - ✔✔✔Financing a goal
What are the purposes of financial markets? - ✔✔✔To provide liquidity and determine prices
,In which financial market are securities such as stocks and bonds are traded after their initial issuance? -
✔✔✔Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term? - ✔✔✔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? - ✔✔✔Primary
market
What is the primary role of financial institutions? - ✔✔✔To conduct financial transactions such as
investments, loans, and deposits
What is a depository institution? - ✔✔✔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? - ✔✔✔Central bank
How do insurance companies pay policyholders when a claim is made? - ✔✔✔They use returns from
stocks and bonds.
Which type of financial institution deals mainly with providing for retirement through employers? - ✔✔
✔Pension fund
A large corporation is looking to merge with another large corporation. Which financial institution can
help them do this? - ✔✔✔Investment bank
, Unemployment rate is which type of economic indicator? - ✔✔✔Lagging
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? - ✔✔✔To regulate inflation and unemployment
What would an inverted yield curve signal? - ✔✔✔It may indicate an economic downturn.
In what way are coincident indicators useful? - ✔✔✔They are analyzed during economic shifts to
provide information about the current state of the economy.
Which responsibility is a focus of the U.S. Securities and Exchange Commission? - ✔✔✔To protect
investors
Which type of financial institution provides individuals and firms access to financial markets? - ✔✔✔
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? - ✔✔✔Private equity
Yield curve is which type of economic indicator? - ✔✔✔Leading
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? - ✔✔✔It may indicate an economic downturn.
Which term reflects a person's beliefs about right and wrong, good and bad, or just and unjust? - ✔✔✔
Moral
EXAMS 100%
Which area of finance deals with sources of funding and the capital structure of corporations and seeks
to increase the value of a firm to its owners? - ✔✔✔Business finance
What is the primary difference between finance and accounting? - ✔✔✔Finance focuses on the future,
while accounting is generally backward-looking.
Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn
positive returns? - ✔✔✔Investments
What is the primary goal of the financial manager of a firm? - ✔✔✔To maximize owner wealth
What should be the main question a firm asks when considering any investment decision? - ✔✔✔Do
the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals? - ✔✔✔To maximize satisfaction from products
purchased and services obtained
Which task does a financial manager perform when choosing to obtain a loan to purchase a piece of
equipment for a new project? - ✔✔✔Making financing decisions
Which financial career focuses on investing capital into firms whose shares are not currently sold on any
public stock exchange? - ✔✔✔Private equity
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? - ✔✔✔Making investment decisions
,What tool can you use to understand your overall personal cash flows? - ✔✔✔Budgeting
What is a reasonable alternative to keeping an emergency stash of cash? - ✔✔✔Investing in a savings
account
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? - ✔✔✔Financing
What area of finance involves deciding which assets to invest in to create wealth in the future? - ✔✔✔
Investments
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? - ✔✔✔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? - ✔✔✔To maximize individual utility
Which professional works with individuals to help them achieve their financial goals? - ✔✔✔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? - ✔✔✔Financing a goal
What are the purposes of financial markets? - ✔✔✔To provide liquidity and determine prices
,In which financial market are securities such as stocks and bonds are traded after their initial issuance? -
✔✔✔Secondary market
What kind of market primarily allows institutions to borrow and lend in the short term? - ✔✔✔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? - ✔✔✔Primary
market
What is the primary role of financial institutions? - ✔✔✔To conduct financial transactions such as
investments, loans, and deposits
What is a depository institution? - ✔✔✔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? - ✔✔✔Central bank
How do insurance companies pay policyholders when a claim is made? - ✔✔✔They use returns from
stocks and bonds.
Which type of financial institution deals mainly with providing for retirement through employers? - ✔✔
✔Pension fund
A large corporation is looking to merge with another large corporation. Which financial institution can
help them do this? - ✔✔✔Investment bank
, Unemployment rate is which type of economic indicator? - ✔✔✔Lagging
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? - ✔✔✔To regulate inflation and unemployment
What would an inverted yield curve signal? - ✔✔✔It may indicate an economic downturn.
In what way are coincident indicators useful? - ✔✔✔They are analyzed during economic shifts to
provide information about the current state of the economy.
Which responsibility is a focus of the U.S. Securities and Exchange Commission? - ✔✔✔To protect
investors
Which type of financial institution provides individuals and firms access to financial markets? - ✔✔✔
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? - ✔✔✔Private equity
Yield curve is which type of economic indicator? - ✔✔✔Leading
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? - ✔✔✔It may indicate an economic downturn.
Which term reflects a person's beliefs about right and wrong, good and bad, or just and unjust? - ✔✔✔
Moral
