D076 Unit 2 Practice Questions
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 - ✔✔A
What is the primary difference between finance and accounting?
-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.
-Finance focuses on the future, while accounting is generally backward-looking.
-Accounting focuses on the future, while finance is generally backward-looking. - ✔✔A
Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn
positive returns?
-Capital structure
-Investments
-Accounting
-Financial institutions - ✔✔B
What is the primary goal of the financial manager of a firm?
-To maximize the manager's utility
-To minimize the asset holdings of the firm
-To maximize owner wealth
,-To minimize the costs of the firm - ✔✔C
What should be the main question a firm asks when considering any investment decision?
-What is the best investment in the stock market?
-Do the benefits of this investment outweigh the costs?
-Will this investment add value to the firm?
-Will this investment help the company reduce costs? - ✔✔B
What is the primary aim of personal finance goals?
-To maximize satisfaction from products purchased and services obtained
-To create more wealth and returns on investments
-To increase consumption of goods and services
-To maximize shareholders' utility by increasing a firm's value - ✔✔A
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 inventory control decisions
-Making financing decisions
-Making investment decisions - ✔✔C
Which financial career focuses on investing capital into firms whose shares are not currently sold on any
public stock exchange?
-Insurance
-Financial planning
-Corporate finance
, -Private equity - ✔✔D
Which task does a financial manager perform when assessing the costs and benefits of potential
projects?
-Managing working capital
-Implementing financial policies
-Making financing decisions
-Making investment decisions - ✔✔D
What tool can you use to understand your overall personal cash flows?
-Budgeting
-Investing
-Setting financial goals
-Saving - ✔✔A
What is a reasonable alternative to keeping an emergency stash of cash?
-Investing in long-term bonds
-Investing the money in a nicer car
-Investing in a savings account
-Investing in high-risk growth stocks - ✔✔C
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?
-Financing
-Assessing
-Investing
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 - ✔✔A
What is the primary difference between finance and accounting?
-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.
-Finance focuses on the future, while accounting is generally backward-looking.
-Accounting focuses on the future, while finance is generally backward-looking. - ✔✔A
Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn
positive returns?
-Capital structure
-Investments
-Accounting
-Financial institutions - ✔✔B
What is the primary goal of the financial manager of a firm?
-To maximize the manager's utility
-To minimize the asset holdings of the firm
-To maximize owner wealth
,-To minimize the costs of the firm - ✔✔C
What should be the main question a firm asks when considering any investment decision?
-What is the best investment in the stock market?
-Do the benefits of this investment outweigh the costs?
-Will this investment add value to the firm?
-Will this investment help the company reduce costs? - ✔✔B
What is the primary aim of personal finance goals?
-To maximize satisfaction from products purchased and services obtained
-To create more wealth and returns on investments
-To increase consumption of goods and services
-To maximize shareholders' utility by increasing a firm's value - ✔✔A
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 inventory control decisions
-Making financing decisions
-Making investment decisions - ✔✔C
Which financial career focuses on investing capital into firms whose shares are not currently sold on any
public stock exchange?
-Insurance
-Financial planning
-Corporate finance
, -Private equity - ✔✔D
Which task does a financial manager perform when assessing the costs and benefits of potential
projects?
-Managing working capital
-Implementing financial policies
-Making financing decisions
-Making investment decisions - ✔✔D
What tool can you use to understand your overall personal cash flows?
-Budgeting
-Investing
-Setting financial goals
-Saving - ✔✔A
What is a reasonable alternative to keeping an emergency stash of cash?
-Investing in long-term bonds
-Investing the money in a nicer car
-Investing in a savings account
-Investing in high-risk growth stocks - ✔✔C
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?
-Financing
-Assessing
-Investing
