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D076 Unit 2 Practice Questions
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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? -Accou...

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  • February 3, 2024
  • 20
  • 2023/2024
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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

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