WGU D076 EXAM QUESTIONS STUDY
GUIDE WITH 100% CORRECT
ANSWERS
\Q\.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?
Financial institutions
Business finance
Investments
Real estate - ANSWERS✔-Business finance is the area of finance that deals with uses and
sources of funding to increase the value of the firm.
\Q\.What is the primary difference between finance and accounting?
Accounting focuses on the future, while finance is generally backward-looking.
Finance provides financial data to decision makers, and accounting involves making decisions
using that data.
Accounting involves investing and forecasting, while finance summarizes a company's financial
information. - ANSWERS✔-Finance focuses on the future, while accounting is generally
backward-looking. Finance is the management and allocation of capital with the objectives of
investing, forecasting, budgeting, saving, lending, and borrowing.
\Q\.Which subspecialty of finance primarily involves deciding which assets will create more
wealth and earn positive returns?
Accounting
Financial institutions
,Capital structure
Investments - ANSWERS✔-Investments. Investments is the area of finance that seeks to create
wealth in the future by deciding where to allocate money.
\Q\.What is the primary goal of the financial manager of a firm?
To minimize the asset holdings of the firm
To minimize the costs of the firm
To maximize owner wealth
To maximize the manager's utility - ANSWERS✔-To maximize owner wealth. The financial
manager should make decisions based on the primary goal of maximizing owner wealth.
\Q\.What should be the main question a firm asks when considering any investment decision? -
ANSWERS✔-Do the benefits of this investment outweigh the costs? For any investment, you
should expect to receive a benefit worth at least as much as the initial cost.
\Q\.What is the primary aim of personal finance goals? - ANSWERS✔-To maximize satisfaction
from products purchased and services obtained
\Q\.Which task does a financial manager perform when choosing to obtain a loan to purchase a
piece of equipment for a new project?
Making credit standard decisions
Making investment decisions
Making inventory control decisions
Making financing decisions - ANSWERS✔-Making financing decisions. The manager is deciding
where to get the funds to support a new project, which means the manager is making a
financing decision.
,\Q\.Which financial career focuses on investing capital into firms whose shares are not currently
sold on any public stock exchange?
Private equity
Financial planning
Insurance
Corporate finance - ANSWERS✔-Private equity deals with investments in firms that are privately
held and whose ownership is not yet bought or sold on any public stock exchange.
\Q\.Which task does a financial manager perform when assessing the costs and benefits of
potential projects?
Managing working capital
Making financing decisions
Making investment decisions
Implementing financial policies - ANSWERS✔-Making investment decisions. Understanding how
benefits weigh up against costs is the first priority before moving forward with financing and
managerial decisions.
\Q\.What tool can you use to understand your overall personal cash flows?
Setting financial goals
Budgeting
Investing
Saving - ANSWERS✔-Budgeting helps you to understand your income and expenses and to
analyze your cash flows.
\Q\.What is a reasonable alternative to keeping an emergency stash of cash?
Investing in a savings account
Investing the money in a nicer car
Investing in high-risk growth stocks
, Investing in long-term bonds - ANSWERS✔-Investing in a savings account. Investing in a readily
withdrawable account that still earns some interest is a value-preserving alternative.
\Q\.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?
Analyzing data
Financing
Assessing
Investing - ANSWERS✔-Financing. Part of the personal finance process is figuring out how to
finance your goals in a way that is within your means.
\Q\.What area of finance involves deciding which assets to invest in to create wealth in the
future?
Investments
Organizational finance
Financial institutions
Investment banking - ANSWERS✔-Investments are an area of finance that involves deciding
which assets to invest in to create wealth in the future.
\Q\.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 an investment decision
Managing financial investments
Managing working capital
GUIDE WITH 100% CORRECT
ANSWERS
\Q\.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?
Financial institutions
Business finance
Investments
Real estate - ANSWERS✔-Business finance is the area of finance that deals with uses and
sources of funding to increase the value of the firm.
\Q\.What is the primary difference between finance and accounting?
Accounting focuses on the future, while finance is generally backward-looking.
Finance provides financial data to decision makers, and accounting involves making decisions
using that data.
Accounting involves investing and forecasting, while finance summarizes a company's financial
information. - ANSWERS✔-Finance focuses on the future, while accounting is generally
backward-looking. Finance is the management and allocation of capital with the objectives of
investing, forecasting, budgeting, saving, lending, and borrowing.
\Q\.Which subspecialty of finance primarily involves deciding which assets will create more
wealth and earn positive returns?
Accounting
Financial institutions
,Capital structure
Investments - ANSWERS✔-Investments. Investments is the area of finance that seeks to create
wealth in the future by deciding where to allocate money.
\Q\.What is the primary goal of the financial manager of a firm?
To minimize the asset holdings of the firm
To minimize the costs of the firm
To maximize owner wealth
To maximize the manager's utility - ANSWERS✔-To maximize owner wealth. The financial
manager should make decisions based on the primary goal of maximizing owner wealth.
\Q\.What should be the main question a firm asks when considering any investment decision? -
ANSWERS✔-Do the benefits of this investment outweigh the costs? For any investment, you
should expect to receive a benefit worth at least as much as the initial cost.
\Q\.What is the primary aim of personal finance goals? - ANSWERS✔-To maximize satisfaction
from products purchased and services obtained
\Q\.Which task does a financial manager perform when choosing to obtain a loan to purchase a
piece of equipment for a new project?
Making credit standard decisions
Making investment decisions
Making inventory control decisions
Making financing decisions - ANSWERS✔-Making financing decisions. The manager is deciding
where to get the funds to support a new project, which means the manager is making a
financing decision.
,\Q\.Which financial career focuses on investing capital into firms whose shares are not currently
sold on any public stock exchange?
Private equity
Financial planning
Insurance
Corporate finance - ANSWERS✔-Private equity deals with investments in firms that are privately
held and whose ownership is not yet bought or sold on any public stock exchange.
\Q\.Which task does a financial manager perform when assessing the costs and benefits of
potential projects?
Managing working capital
Making financing decisions
Making investment decisions
Implementing financial policies - ANSWERS✔-Making investment decisions. Understanding how
benefits weigh up against costs is the first priority before moving forward with financing and
managerial decisions.
\Q\.What tool can you use to understand your overall personal cash flows?
Setting financial goals
Budgeting
Investing
Saving - ANSWERS✔-Budgeting helps you to understand your income and expenses and to
analyze your cash flows.
\Q\.What is a reasonable alternative to keeping an emergency stash of cash?
Investing in a savings account
Investing the money in a nicer car
Investing in high-risk growth stocks
, Investing in long-term bonds - ANSWERS✔-Investing in a savings account. Investing in a readily
withdrawable account that still earns some interest is a value-preserving alternative.
\Q\.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?
Analyzing data
Financing
Assessing
Investing - ANSWERS✔-Financing. Part of the personal finance process is figuring out how to
finance your goals in a way that is within your means.
\Q\.What area of finance involves deciding which assets to invest in to create wealth in the
future?
Investments
Organizational finance
Financial institutions
Investment banking - ANSWERS✔-Investments are an area of finance that involves deciding
which assets to invest in to create wealth in the future.
\Q\.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 an investment decision
Managing financial investments
Managing working capital
