WGU D076 EXAM QUESTIONS AND
ANSWERS
1. 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
2. What is the primary difference between finance and accounting?
ANS Finance focuses on the future, while accounting is generally
backward-looking.
3. Which subspecialty of finance primarily involves deciding which assets
will create more wealth and earn positive returns?
ANS Investments
4. An area of finance that deals with investment allocation and asset
pricing.-
ANS Investments
,5. An area of finance that involves organizations that accept deposits, offer
investment products, loan money, or broker financial transactions.
ANS Financial Institutions
6. An area of finance that involves activities used to increase
shareholder wealth.
ANS Corporate Finance.
7. What is the primary aim of personal finance goals?
ANS To maximize satisfaction from products purchased and services
obtained
8. 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?
9. What is the primary goal of the financial manager of a firm?
ANS To maximize owner wealth
10.What are three main tasks that a financial manager of a firm does in order
to achieve the goal of the firm, which is to maximize shareholder wealth?
ANS making investment decisions,
making financing decisions,
and managing working
,capital.
11.Who is the highest ranking officer in corporate finance?
ANS CFO, Chief Finan- cial Officer
12.What does the CFO do?
ANS The CFO is responsible for all the financial decisions made by the
firm. He or she serves as the CEO's right-hand person in all money
matters and oversees the financial analysis and decision-making of the
firm.
13.Which task does a financial manager perform when assessing the
costs and benefits of potential projects?
ANS Making investment decisions
14.Which financial career focuses on investing capital into firms whose
shares are not currently sold on any public stock exchange?
ANS Private equity
15.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
16.What are the three most important types of securities?
ANS Treasury, Corporate, and Stocks
, 17.Why does the SEC oversee Financial Markets?
ANS To protect Investors
18.What are the purposes of financial markets?
ANS To provide liquidity and deter- mine prices
19.In which financial market are securities such as stocks and bonds
are traded after their initial issuance?
ANS Secondary market
20.What kind of market primarily allows institutions to borrow and lend in
the short term?
ANS Money market
21.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?
ANS Primary market
22.What is a depository institution?
ANS An institution that accepts and pays interest on deposits of money,
as well as extends loans
23.What is the primary role of financial institutions?
ANS To conduct financial trans- actions such as investments, loans, and
ANSWERS
1. 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
2. What is the primary difference between finance and accounting?
ANS Finance focuses on the future, while accounting is generally
backward-looking.
3. Which subspecialty of finance primarily involves deciding which assets
will create more wealth and earn positive returns?
ANS Investments
4. An area of finance that deals with investment allocation and asset
pricing.-
ANS Investments
,5. An area of finance that involves organizations that accept deposits, offer
investment products, loan money, or broker financial transactions.
ANS Financial Institutions
6. An area of finance that involves activities used to increase
shareholder wealth.
ANS Corporate Finance.
7. What is the primary aim of personal finance goals?
ANS To maximize satisfaction from products purchased and services
obtained
8. 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?
9. What is the primary goal of the financial manager of a firm?
ANS To maximize owner wealth
10.What are three main tasks that a financial manager of a firm does in order
to achieve the goal of the firm, which is to maximize shareholder wealth?
ANS making investment decisions,
making financing decisions,
and managing working
,capital.
11.Who is the highest ranking officer in corporate finance?
ANS CFO, Chief Finan- cial Officer
12.What does the CFO do?
ANS The CFO is responsible for all the financial decisions made by the
firm. He or she serves as the CEO's right-hand person in all money
matters and oversees the financial analysis and decision-making of the
firm.
13.Which task does a financial manager perform when assessing the
costs and benefits of potential projects?
ANS Making investment decisions
14.Which financial career focuses on investing capital into firms whose
shares are not currently sold on any public stock exchange?
ANS Private equity
15.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
16.What are the three most important types of securities?
ANS Treasury, Corporate, and Stocks
, 17.Why does the SEC oversee Financial Markets?
ANS To protect Investors
18.What are the purposes of financial markets?
ANS To provide liquidity and deter- mine prices
19.In which financial market are securities such as stocks and bonds
are traded after their initial issuance?
ANS Secondary market
20.What kind of market primarily allows institutions to borrow and lend in
the short term?
ANS Money market
21.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?
ANS Primary market
22.What is a depository institution?
ANS An institution that accepts and pays interest on deposits of money,
as well as extends loans
23.What is the primary role of financial institutions?
ANS To conduct financial trans- actions such as investments, loans, and
