Finance Skills for Managers Exam Questions
With Verified Answers
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?
a) real estate
b) financial institutions
c) investments
d) business finance - answer✔D. Business Finance
What is the primary difference between finance and accounting?
a) Accounting focuses on the future, while finance is generally backward-looking.
b) Finance focuses on the future, while accounting is generally backward-looking.
c) Finance provides financial data to decision makers, and accounting involves making decisions
using that data.
d) Accounting involves investing and forecasting, while finance summarizes a company's
financial information. - answer✔B. 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?
a) financial institutions
b) accounting
c) capital structure
d) investments - answer✔D. Investments
What is the primary goal of the financial manager of a firm?
a) to maximize owner's wealth
b) to minimize costs of the firm
c) to minimize the asset holdings of the firm
d) to maximize manager's utility - answer✔A. To maximize owner's wealth
What should be the main question a firm asks when considering any investment decision?
a) What is the best investment in the stock market?
b) Will this investment help the company reduce costs?
c) Do the benefits of this investment outweigh the costs?
d) Will this investment add value to the firm? - answer✔C. Do the benefits of this investment
outweigh the costs
What is the primary aim of personal finance goals?
a) To create more wealth and returns on investments
b) To maximize satisfaction from products purchased and services obtained
c) To maximize shareholders' utility by increasing a firm's value
d) To increase consumption of goods and services
Next - answer✔B. To maximize satisfaction from products purchased and services obtained.
This is the schedule of payments on a loan showing the breakdown between interest and
principal repayments. (Payment stays the same, but amount applied to principal increases.) -
answer✔Amortization schedule
Which of the following securities have potentially the highest risk level?
a) mutual fund
b) bonds
c) gold
d) individual stocks - answer✔D. Individual stocks
Which task does a financial manager perform when choosing to obtain a loan to purchase a piece
of equipment for a new project?
a) making financial decisions
b) making investment decisions
c) making credit standard decisions
d) making inventory control decisions - answer✔A. Making financial decisions
Which financial career focuses on investing capital into firms whos shares are not currently sold
on any public stock exchange? - answer✔B. Private Equity
Which task does a financial manager perform when assessing the costs and benefits of potential
projects?
a) implementing financial policies
b) managing working capital
c) making financing decisions
d) making investment decisions - answer✔D. Making investment decisions
What tool can you use to understand your overall cashflows?
a) investing
b) saving
c) budgeting
d) setting financial goals - answer✔C. Budgetng
What is a reasonable alternative to keeping an emergency stash of cash?
a) investing in long-term bonds
b) investing in high-risk growth stocks
c) investing in a saving account
d) investing the money in a nicer car - answer✔C. Investing in a saving 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?
a) assessing
b) analyzing data
c) investing
d) financing - answer✔D. Financing
What are the three subspecialties of finance?
a) accounting, investing, insurance planning
b) corporate banking, private equity, insurance planning
d) business finance, investment, financial institutions - answer✔D. Business finance, investment,
financial institutions
What area of finance involves deciding which assets to invest in to create wealth in the future?
a) investment banking
b) financial institutions
c) organizational finance
d) investments - answer✔D. Investments
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?
a) making an investment decision
b) making a financing decision
c) managing financial investments
d) managing working capital - answer✔B. Making 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?
a) to minimize personal expenses
b) to maximize individual utility
c) to set priorities in personal finances
d) to make personal finances predictable - answer✔B. To maximize individual utility
Which professional works with individuals to help them achieve their financial goals?
a) corporate financial analyst
b) commercial banker
c) financial planner
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 Brainbarter. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
