D076 Finance Skills for Managers - (QUIZ)

Unit 2 (Module 1) What area of finance involves deciding which assets to invest in to create wealth in the future? - Unit 2 Investments (Investments are an area of finance that involves deciding which assets to invest in to create wealth in the future.) 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 a financing decision (Since the project has already been approved, Hannah is trying to find a way to finance the investment and considering its capital structure.) Maria and Mateo are setting financial goals. They decide that they need to save $200 each month to reach their goal of taking their children to visit their grandparents in Spain next summer. What is the objective of setting such a goal? - To maximize individual utility (While everyone has different personal financial goals, the objectives of such goals is to maximize individual utility.) Which professional works with individuals to help them achieve their financial goals? - Financial planner (Professional financial planners work with individuals to help them achieve their financial goals.) Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he is still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can either take out an auto loan from a bank or use a mix of cash and an auto loan. In this scenario, what is Omar doing? - Financing a goal (He has already made a decision to purchase the car and is now deciding on financing options.) (Module 2) Which responsibility is a focus of the U.S. Securities and Exchange Commission? - To protect investors (The responsibilities of SEC are to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.) Which type of financial institution provides individuals and firms access to financial markets? - Investment institutions (Investment institutions provide both individuals and firms access to financial markets.) Which financial institution includes entities that receive money from institutional investors and wealthy individuals to buy troubled companies to improve them and earn returns by selling them or going public? - Private equity (This is the role of a buyout private equity firm.) Yield curve is which type of economic indicator? - Leading (Leading indicators change before the economy changes.) About a year ago, the short-term Treasury bill had 1.54% interest and the long-term Treasury note had 2.54% interest. This week, the 1-year Treasury bill has an interest rate of 3.13%, while the 10-year Treasury note has an interest rate of 2.28%. What does this information indicate about the future economy? - It may indicate an economic downturn. (Since the long-term Treasury interest rate is lower than the short-term rate, it has an inverted yield curve, which may indicate an economic downturn.) (Module 3) What does the term legal describe? - (Module 3) An action that is in accordance with the laws and rules set by an authority. (Legal means to follow the laws and rules set by an authority.)