WGU C214 Topic 1 Quick Check Questions/Answers Complete Solution

1.1 T/F: Economics is a subfield of finance - ANS-False 1.1 Which of the following is not an example of firm capital? (Cash, machinery, labor, financial markets) - ANS-Financial markets 1.1 T/F: Capital is defined as a financial asset - ANS-True 1.1 T/F: Corporate finance is devoted to understanding various types of financial instruments - ANS-False - Investments is devoted to understanding various types of financial instruments 1.1 Which is firm capital: Bank deposits, cash, the firm's worth, or none of these - ANS-Cash 1.1 T/F: Corporate finance focuses on the decision making by management of the firm - ANS-True 1.1 What are the 3 important areas of finance covered in this section - ANSCorporate finance, investments, and banking/financial institutions 1.1 T/F: Banks make money when the interest they charge to their borrowers is less than interest rates paid to their lenders - ANS-False. Banks must charge their borrowers more interest than they pay to their lenders to make more money 1.1 T/F: Stocks and bonds are two types of financial instruments - ANS-True 1.2 T/F: Stocks and bonds are two types of financial instruments - ANS-True 1.2 T/F: Stock represents ownership in a particular company - ANS-True 1.2 T/F: Companies can raise capital by issuing bonds or stocks - ANS-True 1.2 T/F: A stock is a debt instrument issued by corporations - ANS-False 1.2 A Treasury bond is a debt instrument issued by corporations. - ANS-False - Issued by governments 1.2 A bond is a debt instrument issued by corporations or governments - ANS-True 1.2 A stock is a share of ______________ in a particular company - ANS-Ownership 1.2 T/F: A bond is similar to a loan - ANS-True 1.3 T/F: Primary financial markets are markets where issuers place new securities with investors - ANS-True