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D076 WGU Finance Skills for Managers TEST PASSED
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What is a reasonable alternative to keeping an emergency stash of cash? Investing in a savings account Investing in a readily withdrawable account that still earns some interest is a value-preserving alternative. Which area of finance deals with sources of funding and the capital structure of c...

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  • February 3, 2024
  • 21
  • 2023/2024
  • Exam (elaborations)
  • Questions & answers

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  • d076 wgu finance skills for managers test passed

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  • AQA
  • WGU
  • WGU D076
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D076 WGU Finance Skills for Managers
TEST PASSED
What is a reasonable alternative to keeping an emergency stash of cash?

Investing in a savings account

Investing in a readily withdrawable account that still earns some interest is a value-preserving
alternative.

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 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.

Which subspecialty of finance primarily involves deciding which assets will create more wealth and earn
positive returns?

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 maximize owner wealth.

The financial manager should make decisions based on the primary goal of maximizing owner wealth.

What should be the main question a firm asks when considering any investment decision?

Do the benefits of this investment outweigh the costs?

For any investment, you should expect to receive a benefit worth at least as much as the initial cost.

What is the primary aim of personal finance goals?

To maximize satisfaction from products purchased and services obtained. The objective of personal
financial goals is to maximize one's utility.

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.

,The manager is deciding where to get the funds to support a new project, which means the manager is
making a financing decision.

Which financial career focuses on investing capital into firms whose shares are not currently sold on any
public stock exchange?

Private equity deals with investments in firms that are privately held and whose ownership is not yet
bought or sold on any public stock exchange.

Which task does a financial manager perform when assessing the costs and benefits of potential
projects?

Making investment decisions

Managing working capital means overseeing day-to-day operations and cash flows.

What tool can you use to understand your overall personal cash flows?

Budgeting helps you to understand your income and expenses and to analyze your cash flows.

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

Part of the personal finance process is figuring out how to finance your goals in a way that is within your
means

What area of finance involves deciding which assets to invest in to create wealth in the future?

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.

What are the purposes of financial markets?

The purposes of financial markets are to provide liquidity and to determine prices.

In which financial market are securities such as stocks and bonds are traded after their initial issuance?

Secondary market

Financial securities are first sold in the primary financial market and then traded among investors in the
secondary financial market.

What kind of market primarily allows institutions to borrow and lend in the short term?

Money market

Assets in money markets are typically highly liquid and intended for use within a year or less.

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

When a company issues stock for the first time to raise capital, shares must initially be sold through a
primary market.

What is the primary role of financial institutions?

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