WGU D076 Finance Skills for Managers (PA)

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FINANCIAL ENVIRONMENT

In which way is accounting different from finance?

• Accounting is backward looking, while finance is

focused on the future.

• Accounting forecasts future performance, given the

past, while finance records past performance.

• Accounting is focused on allocating capital, while

finance is focused on bringing in capital.

• Accounting is about budgeting, saving, and borrowing,

while finance is about investing, forecasting, and lending.

• Accounting is backward looking, while finance is focused on the future.

FINANCIAL ENVIRONMENT

What is the main question that both individuals and companies must consider when making financial decisions to reach a goal?

• Will utility be maximized through this decision?
• Will this decrease the amount of cash available?
• Will this decision require debt or equity financing?
• Will the benefits of the action outweigh the costs?
• Will this decision require debt or equity financing?

FINANCIAL ENVIRONMENT

A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year.Which main task in business finance is this situation an example of?

• Making financing decisions
• Managing working capital
• Making investment decisions
• Managing interdepartmental loans
• Making financing decisions

FINANCIAL ENVIRONMENT

How can investing help a person reach personal financial goals?

• It helps a person understand how money was spent

previously in order to reliably predict future expenses.

• It ensures money is placed in a safe, risk-free, and

easily accessible financial asset.

• It provides access to potential revenue or increases in

value to help meet goals faster.

• It provides a guaranteed future outcome in order to

predictably meet financial goals.

• It provides access to potential revenue or increases in value to help meet goals

faster.

FINANCIAL ENVIRONMENT

A sign company is planning to have an initial public offering (IPO). In which type of market will its stock first be sold to the public?

• Primary market
• Efficient market
• Secondary market
• Money market
• Primary market

FINANCIAL ENVIRONMENT

Which type of economic indicator changes after the economy changes and helps identify trends in the long term?

• Coincident indicator
• Yield curve indicator
• Lagging indicator
• Leading indicator
• Lagging indicator

FINANCIAL ENVIRONMENT

How does an investment institution, such as a mutual fund, facilitate the circulation of money in the economy?

• By raising capital on a contractual basis, such as an

insurance contract

• By providing individuals and firms access to financial

markets to buy or sell financial securities

• By insuring deposits in investment accounts up to

$250,000 to promote public confidence

• By accepting deposits of money, paying interest on

deposits, and providing loans to individuals and organizations

• By providing individuals and firms access to financial markets to buy or sell

financial securities

FINANCIAL ENVIRONMENT

Which type of economic indicator is used by governments and policymakers to implement or alter policies in an effort to avoid or minimize the effects of an economic downturn?

• Lagging indicator
• Correlated indicator
• Leading indicator
• Coincident indicator
• Leading indicator

FINANCIAL ENVIRONMENT

Suppose an individual does not eat chocolate because eating chocolate goes against personal beliefs. Which type of standard is this?

• Legal
• Moral
• Financial
• Ethical
• Moral

FINANCIAL ENVIRONMENT

Which action is based upon moral standards?

• Although there is no company policy regarding it, a

financial manager chooses not to accept gifts from the company's clients to avoid creating a conflict of interest.

• As mandated by government regulations, a financial

manager files a registration statement with the U.S.Securities and Exchange Commission (SEC) before offering equity securities for sale.

• As outlined in the company's policies, a financial

manager hires a third-party entity to review all annual report filings to ensure they are compliant with applicable generally accepted accounting principles

(GAAP).

• Since it is generally accepted in the company that no

personal information about clients should be released without written permission, a financial manager denies the request for a third party to access its data.

• Although there is no company policy regarding it, a financial manager chooses

not to accept gifts from the company's clients to avoid creating a conflict of interest.

FINANCIAL ENVIRONMENT

What should a potential bondholder (lender) do to prevent a company (borrower) from taking on risky projects?

• Release managers who do not attempt to maximize

immediate shareholder value

• Encourage manipulation of accounting procedures to

optimize the company's profit

• Set strict covenants that the company cannot uphold if

it chooses a risky project

• Separate owners from management so their interests

do not conflict

• Set strict covenants that the company cannot uphold if it chooses a risky

project