d076 finance STUDY GUIDE

what is the difference between finance and accounting - The easiest way to describe these differences is that finance is forward-looking, or focuses primarily on the future, while accounting is generally backward-looking and focuses on the past. There are three primary areas in the world of finance: - Business finance Investments Financial institutions This area involves deciding which assets to invest in to create wealth in the future. - Investment The process of valuing assets - ASSETS PRICING What someone would pay right now for an asset. - current market value is an area of finance that involves organizations that accept deposits, offer investment products, loan money, or broker financial transactions. - Financial institutions 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 the total satisfaction received from consuming goods and services - Utility 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 three main tasks that a financial manager - making investment decisions, making financing decisions, and managing working capital. Making investment decisions for the firm is the most important task for the - financial manager DevelopmentThe business function responsible for improving and developing services and products. - research and development A financial asset that can be used by a firm or individual. Examples of ... may be machinery or cash held by a firm. - capital Professional managers of investment capital that typically invest in very young new ventures. - Venture Capitalists (VCs) Generating cash or stock from the sales or IPO of companies in the portfolio of investments. - Harvest The entry-level position in a commercial bank is a - teller assess the riskiness of lending to borrowers and determining whether loans should be extended to potential bank clients. - credit analysts is responsible to find and attract new clients - personal banker Everything that a person owns or controls, especially at death. - Estates An arrangement that allows a third party to hold assets on behalf of a beneficiary or beneficiaries. - Trusts have to pay attention to the firm's short-term obligations. - Financial managers After the investment decisions are made, the financial manager has to decide how to finance such projects. - 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