D076 Module 1 REVIEW

3 main tasks a financial manager of a firm does - makes investment decisions makes financing decisions manages working capital Business Finance - An area of finance that deals with sources of funding, the capital structure of corporations, the actions that managers take to increase the value of the firm to the owners, and the tools and analysis used to allocate financial resources. Capital - A financial asset that can be used by a firm or an individual. Capital Structure - the mixture of debt and equity maintained by a firm Financial institutions - An area of finance that includes firms or organizations that exist to accept wide variety of deposits, to offer investment products to individuals and businesses, to provide loans, or to broker financial transactions. 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 Investments - An area of finance that involves deciding which assets to invest in to create wealth in the future 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? - maximize individual utility