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Finance Skills for Managers - D076 already graded A+ 2024/2025
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Finance Skills for Managers - D076 already graded A+ 2024/2025
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Finance Skills for Managers - D076Which 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? - ANSBusiness finance
What is the primary difference between finance and accounting? - ANSFinance 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? - ANSInvestments
What is the primary goal of the financial manager of a firm? - ANSTo maximize owner wealth
What should be the main question a firm asks when considering any investment decision? -
ANSDo the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals? - ANSTo maximize satisfaction from
products purchased and services obtained
Which task does a financial manager perform when choosing to obtain a loan to purchase a
piece of equipment for a new project? - ANSMaking financing decisions
Which financial career focuses on investing capital into firms whose shares are not currently
sold on any public stock exchange? - ANSPrivate equity
Which task does a financial manager perform when assessing the costs and benefits of
potential projects? - ANSMaking investment decisions
What tool can you use to understand your overall personal cash flows? - ANSBudgeting
What is a reasonable alternative to keeping an emergency stash of cash? - ANSInvesting in a
savings account
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? -
ANSFinancing
What area of finance involves deciding which assets to invest in to create wealth in the future? -
ANSInvestments
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? - ANSMaking a financing decision
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? - ANSTo maximize individual utility
Which professional works with individuals to help them achieve their financial goals? -
ANSFinancial planner
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? - ANSFinancing a goal
What are the purposes of financial markets? - ANSTo provide liquidity and determine prices
In which financial market are securities such as stocks and bonds are traded after their initial
issuance? - ANSSecondary market
What kind of market primarily allows institutions to borrow and lend in the short term? -
ANSMoney 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? -
ANSPrimary market
What is the primary role of financial institutions? - ANSTo conduct financial transactions such as
investments, loans, and deposits
What is a depository institution? - ANSAn institution that accepts and pays interest on deposits
of money, as well as extends loans
Which financial institution ensures that a nation's economy remains healthy by controlling the
amount of money circulating in the economy? - ANSCentral bank
How do insurance companies pay policyholders when a claim is made? - ANSThey use returns
from stocks and bonds.
Which type of financial institution deals mainly with providing for retirement through employers?
- ANSPension fund
,A large corporation is looking to merge with another large corporation. Which financial institution
can help them do this? - ANSInvestment bank
Unemployment rate is which type of economic indicator? - ANSLagging
The Federal Reserve sometimes adjusts the interest rate at which commercial banks can
borrow from it. What is the purpose of adjusting the interest rate? - ANSTo regulate inflation and
unemployment
What would an inverted yield curve signal? - ANSIt may indicate an economic downturn.
In what way are coincident indicators useful? - ANSThey are analyzed during economic shifts to
provide information about the current state of the economy.
Which responsibility is a focus of the U.S. Securities and Exchange Commission? - ANSTo
protect investors
Which type of financial institution provides individuals and firms access to financial markets? -
ANSInvestment institutions
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? - ANSPrivate equity
Yield curve is which type of economic indicator? - ANSLeading
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? - ANSIt may indicate an economic downturn.
Which term reflects a person's beliefs about right and wrong, good and bad, or just and unjust? -
ANSMoral
What characterizes an ethical action? - ANSAn ethical action is based on accepted standards of
conduct.
Lucas is a financial advisor working for Bullzai, Inc. He is faced with a dilemma. Bullzai has
started changing its practices in order to increase profit. As a financial advisor, he is now
supposed to suggest to clients to invest in portfolios that will not do as well as the portfolios that
Bullzai is invested in. This is an accepted practice done by other businesses in the industry, and
it complies with all standards set by the government. However, Lucas knows that this practice is
not in his clients' best interest. What type of dilemma is Lucas facing? - ANSMoral
, Which type of error would result in a set repercussion or penalty given by the government? -
ANSLegal
Nora is an investment manager, which means that she is paid to invest other people's money.
To meet her goal for the month, she is seeking to invest money from clients in an investment
that is risky but potentially has a higher return. What about this situation represents an ethical
dilemma? - ANSNora is considering investing in a risky asset just to meet her monthly goal.
What are the effects of attempting to maximize shareholder value for a business in an unethical
way? - ANSIt often leads to decreased shareholder value for the business.
Endothon Company has decided to move its production from the United States to a foreign
country. Which situation below would constitute an unethical action by the company? -
ANSSaving money by paying inadequate wages to workers overseas
Why would bondholders set bond contracts that are very strict to deter the company from taking
on risky projects? - ANSBondholders are primarily interested in making sure they will be paid
back.
Which kind of projects are bondholders interested in? - ANSSafe projects with a higher chance
of providing sufficient compensation
Which scenario is an example of an agency problem? - ANSA manager purchases a company
car and allocates it as a company expense.
How can agency costs be mitigated? - ANSAligning managers' interests with shareholders'
interests
What is the third step in finding a solution to an ethical dilemma? - ANSConsider all
stakeholders involved
What does the term legal describe? - ANSAn action that is in accordance with the laws and
rules set by an authority.
Jack is a personal financial advisor. He is with a new client, and the client is asking him what he
recommends for her portfolio. Jack knows that his firm's investment product performed well last
year, but its performance changes from year to year—some years it is better than the market,
and some years it is not. Also, the fee to invest in the product is higher than the fee to invest in a
market index fund. If Jack sells his company's investment product, the customer's loyalty to the
company is doubled. Which actions should Jack take? - ANSGive a personal recommendation
of the company's product while explaining its performance relative to the market over the past
several years.
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