Exam (elaborations)
(TEST) Finance Skills for Managers - D076 already graded A+ 2024/2025
- Course
- Institution
(TEST) Finance Skills for Managers - D076 already graded A+ 2024/2025
[Show more]
Content preview
(TEST) Finance Skills for Managers - D076UNIT 2
What are the main services offered by financial institutions? - ANSAccepting a wide variety of
deposits, offering investment products, providing loans, and brokering financial transactions
(Correct! Financial institutions such as banks, insurance companies, and mutual fund
companies provide these services.)
What is the main objective of personal financial goals? - ANSTo maximize individual utility
(Correct! You set goals and act to increase your satisfaction or happiness by taking care of
necessities and achieving priorities.)
Which task does the financial manager of a firm perform that involves the issuance of new
stocks and bonds? - ANSMaking financing decisions
(Correct! Once investment decisions are made, a financial manager considers different
possibilities of financing sources for the investments. This may include issuing new stocks and
bonds.)
Why is understanding the definition of finance important in managing personal finances? - ANSIt
helps individuals compare the costs and benefits of an action to determine whether to take that
action.
(Correct! Any financial decision should make sense in terms of its costs and benefits.)
In which type of market would a company issue bonds or stocks for the first time? - ANSPrimary
market
(Correct! This is the purpose of a primary market.)
Which type of financial institution is a mutual fund? - ANSInvestment institution
(Correct! Investment institutions provide individuals and firms access to financial markets.)
Which financial institution specializes in managing and administering retirement funds? -
ANSPension funds
(Correct! Pension funds specialize in retirement funds.)
, Which type of economic indicator is the consumer price index? - ANSLagging indicator
(Correct! CPI usually changes after the economy as a whole changes.)
What does the term ethical refer to? - ANSThe accepted standards of conduct that guide a
person's behavior
(Correct! Ethical refers to the accepted standards of conduct that guide a person's behavior.)
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
ethical issue is occurring in this situation? - ANSAgency problem due to conflicting interests
(Correct! Accounting manipulation by management in pursuit of higher stock-related
compensation is an example of an agency problem.)
UNIT 3
What is another name for the cost of capital? - ANSDiscount rate
(Correct. Cost of capital, discount rate, required rate, and interest rate are the same thing with
different names based on different perspectives.)
What is the name for the minimum rate of return that an investor or lender will accept for
investments? - ANSRequired rate of return
(Correct. This is the rate that investors accept as compensation for risk, opportunity cost, and
inflation.)
The nominal interest rate of an investment is 8%, and the inflation rate is 3%. What is the real
interest rate? - ANS5%
(Correct. Real Rate = Nominal Rate - Inflation, so 8% - 3% = 5%.)
Which action reduces the future value of cash flows? - ANSReceive all cash flows later than
expected.
(Correct. The later the cash flows are received, the lower the future value is.)
How is risk defined in finance? - ANSThe possibility that the realized or actual return will differ
from what we expect
(Correct. Risk is defined as the possibility that the realized or actual return will differ from our
expected return.)
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Ashley96. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $12.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
62890 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now