D076 WGU QUESTIONS FINANCE SKILLS FOR
MANAGERS
In which way is accounting different from finance?
Accounting is backward looking, while finance is focused on the future.
What is the main question that both individuals and companies must consider when
making financial decisions to reach a goal?
Will the benefits of the action outweigh the costs?
A financial manager at a company is trying to determine whether to issue new stocks or
new bonds to cover the costs of a project the company is doing the next year.
Which main task in business finance is this situation an example of?
Making financing decisions
How can investing help a person reach personal financial goals?
It provides access to potential revenue or increases in value to help meet goals faster.
A sign company is planning to have an initial public offering (IPO). In which type of
market will its stock first be sold to the public?
Primary market
Which type of economic indicator changes after the economy changes and helps
identify trends in the long term?
Lagging indicator
How does an investment institution, such as a mutual fund, facilitate the circulation of
money in the economy?
By providing individuals and firms access to financial markets to buy or sell financial
securities
, Which type of economic indicator is used by governments and policymakers to
implement or alter policies in an effort to avoid or minimize the effects of an economic
downturn?
Leading indicator
Suppose an individual does not eat chocolate because eating chocolate goes against
his personal beliefs. Which type of standard is this?
Moral
Which action is based upon moral standards?
Although there is no company policy regarding it, a financial manager chooses not to
accept gifts from the company's clients to ensure that she does not create a conflict of
interest.
What should a potential bondholder (lender) do to prevent a company (borrower) from
taking on risky projects?
Set strict covenants that the company cannot uphold if it chooses a risky project
What is the term for an individual's beliefs concerning what is and is not acceptable to
personally do?
Morals
Which factor contributes to the inflation of the prices of goods and services over time?
Increase in demand for goods and services
Why can compounding interest be a good tool but also a significant detriment?
Compounding interest can be a good tool because it allows a lender to gain interest on
interest, but it is a detriment because it causes a borrower to pay interest on interest.
Which component of the required rate of return takes into account the loss of potential
gain from other alternatives?
Opportunity cost
How is inflation calculated?
Inflation is calculated by determining the rate at which the average price level of
particular goods and services increases over a period of time in an economy.
MANAGERS
In which way is accounting different from finance?
Accounting is backward looking, while finance is focused on the future.
What is the main question that both individuals and companies must consider when
making financial decisions to reach a goal?
Will the benefits of the action outweigh the costs?
A financial manager at a company is trying to determine whether to issue new stocks or
new bonds to cover the costs of a project the company is doing the next year.
Which main task in business finance is this situation an example of?
Making financing decisions
How can investing help a person reach personal financial goals?
It provides access to potential revenue or increases in value to help meet goals faster.
A sign company is planning to have an initial public offering (IPO). In which type of
market will its stock first be sold to the public?
Primary market
Which type of economic indicator changes after the economy changes and helps
identify trends in the long term?
Lagging indicator
How does an investment institution, such as a mutual fund, facilitate the circulation of
money in the economy?
By providing individuals and firms access to financial markets to buy or sell financial
securities
, Which type of economic indicator is used by governments and policymakers to
implement or alter policies in an effort to avoid or minimize the effects of an economic
downturn?
Leading indicator
Suppose an individual does not eat chocolate because eating chocolate goes against
his personal beliefs. Which type of standard is this?
Moral
Which action is based upon moral standards?
Although there is no company policy regarding it, a financial manager chooses not to
accept gifts from the company's clients to ensure that she does not create a conflict of
interest.
What should a potential bondholder (lender) do to prevent a company (borrower) from
taking on risky projects?
Set strict covenants that the company cannot uphold if it chooses a risky project
What is the term for an individual's beliefs concerning what is and is not acceptable to
personally do?
Morals
Which factor contributes to the inflation of the prices of goods and services over time?
Increase in demand for goods and services
Why can compounding interest be a good tool but also a significant detriment?
Compounding interest can be a good tool because it allows a lender to gain interest on
interest, but it is a detriment because it causes a borrower to pay interest on interest.
Which component of the required rate of return takes into account the loss of potential
gain from other alternatives?
Opportunity cost
How is inflation calculated?
Inflation is calculated by determining the rate at which the average price level of
particular goods and services increases over a period of time in an economy.
