D076 - Finance Skills for Managers Questions With Actual Solutions

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 Real estate Investments Financial institutions - ANSWER-Correct! Business finance is the area of finance that deals with uses and sources of funding to increase the value of the firm. What is the primary difference between finance and accounting? Finance focuses on the future, while accounting is generally backward-looking. Accounting involves investing and forecasting, while finance summarizes a company's financial information. Finance provides financial data to decision makers, and accounting involves making decisions using that data. Accounting focuses on the future, while finance is generally backward-looking. - ANSWER-Correct! Finance is the management and allocation of capital with the objectives of investing, forecasting, budgeting, saving, lending, and borrowing. Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn positive returns? Accounting Investments. Capital structure Financial institutions - ANSWER-Investments Correct! Investments is the area of finance that seeks to create wealth in the future by deciding where to allocate money. What is the primary goal of the financial manager of a firm? To minimize the asset holdings of the firm To maximize the manager's utility To maximize owner wealth To minimize the costs of the firm - ANSWER-To maximize owner wealth Correct! The financial manager should make decisions based on the primary goal of maximizing owner wealth.