WGU D076 Questions and Answers Already Passed

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 What is the primary difference between finance and accounting? Finance focuses on the future, while accounting is generally backward-looking. Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn positive returns? Investments An area of finance that deals with investment allocation and asset pricing. Investments An area of finance that involves organizations that accept deposits, offer investment products, loan money, or broker financial transactions. Financial Institutions An area of finance that involves activities used to increase shareholder wealth. Corporate Finance. What is the primary aim of personal finance goals? To maximize satisfaction from products purchased and services obtained What should be the main question a firm asks when considering any investment decision? Do the benefits of this investment outweigh the costs? What is the primary goal of the financial manager of a firm? To maximize owner wealth What are three main tasks that a financial manager of a firm does in order to achieve the goal of the firm, which is to maximize shareholder wealth? making investment decisions, making financing decisions, and managing working capital. Who is the highest ranking officer in corporate finance? CFO, Chief Financial Officer What does the CFO do? The CFO is responsible for all the financial decisions made by the firm. He or she serves as the CEO's right-hand person in all money matters and oversees the financial analysis and decision-making of the firm. Which task does a financial manager perform when assessing the costs and benefits of potential projects? Making investment decisions Which financial career focuses on investing capital into firms whose shares are not currently sold on any public stock exchange? Private equity Which task does a financial manager perform when choosing to obtain a loan to purchase a piece of equipment for a new project? Making financing decisions What are the three most important types of securities? Treasury, Corporate, and Stocks Why does the SEC oversee Financial Markets? To protect Investors What are the purposes of financial markets? To provide liquidity and determine prices In which financial market are securities such as stocks and bonds are traded after their initial issuance? Secondary market What kind of market primarily allows institutions to borrow and lend in the short term? Money market A local start-up company just hit its five-year anniversary and is planning an initial public offering sometime this year. In order to issue public stock, which market will the company use? Primary market What is a depository institution? An institution that accepts and pays interest on deposits of money, as well as extends loans What is the primary role of financial institutions? To conduct financial transactions such as investments, loans, and deposits A large corporation is looking to merge with another large corporation. Which financial institution can help them do this? Investment bank Which type of financial institution deals mainly with providing for retirement through employers? Pension fund How do insurance companies pay policyholders when a claim is made? They use returns from stocks and bonds. Which financial institution ensures that a nation's economy remains healthy by controlling the amount of money circulating in the economy? Central bank