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Fin 303 chap 1&2 Review Exam Questions and Complete Solutions Graded A+
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Fin 303 chap 1&2 Review Exam Questions and Complete Solutions Graded A+
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Fin 303 chap 1&2Review Exam
Questions and
Complete Solutions
Graded A+
Denning [Date] [Course title]
, How is finance related to the disciplines of accounting and economics? - Answer: Financial
management is essentially a combination of accounting and economics. First, financial managers use
accounting information—balance sheets, income statements, and so on—to analyze, plan, and allocate
financial resources for business firms. Second, financial managers use economic principles to guide them
in making financial decisions that are in the best interest of the firm. In other words, finance is an
applied area of economics that relies on accounting for input.
List and describe the three career opportunities in the field of finance. - Answer: Finance has three
main career paths: financial management, financial markets and institutions, and investments.
Financial management involves managing the finances of a business. Financial managers—people who
manage a business firm's finances—perform a number of tasks. They analyze and forecast a firm's
finances; assess risk, evaluate investment opportunities, decide when and where to find money sources
and how much money to raise, and decide how much money to return to the firm's investors.
Bankers, stockbrokers, and others who work in financial markets and institutions focus on the flow of
money through financial institutions and the markets in which financial assets are exchanged. They track
the impact of interest rates on the flow of that money.
People who work in the field of investments locate, select, and manage income-producing assets. For
instance, security analysts and mutual fund managers both operate in the investment field.
Describe the duties of the financial manager in a business firm. - Answer: Financial managers measure
the firm's performance, determine what the financial consequences will be if the firm maintains its
present course or changes it, and recommend how the firm should use its assets. Financial managers
also locate external financing sources and recommend the most beneficial mix of financing sources, and
they determine the financial expectations of the firm's owners.
All financial managers must be able to communicate, analyze, and make decisions based on information
from many sources. To do this, they need to be able to analyze financial statements, forecast and plan,
and determine the effect of size, risk, and timing of cash flows.
What is the basic goal of a business? - Answer: The primary financial goal of the business firm is to
maximize the wealth of the firm's owners. Wealth, in turn, refers to value. If a group of people owns a
business firm, the contribution that firm makes to that group's wealth is determined by the market
value of that firm.
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