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What area of finance deals with sources of funding and the capital structure of corporations?
Business Finance.
What is the primary difference between finance and accounting?
Finance focuses on the future, while accounting is backward-looking.
Which sub-specialty of finance involves deciding which assets create more wealth?
Investments.
What is the primary goal of the financial manager of a firm?
To maximize owner wealth.
What should a firm consider when making investment decisions?
Do the benefits of this investment outweigh the costs?
What is the primary aim of personal finance goals?
To maximize one's utility.
What task does a financial manager perform when obtaining a loan for a new project?
Making financing decisions.
Which financial career focuses on investing in privately held firms?
Private Equity.
What task does a financial manager perform when assessing project costs and benefits?
Making investment decisions.
What tool helps you understand your overall personal cash flows?
Budgeting.
What is a reasonable alternative to keeping an emergency stash of cash?
Investing in a savings account.
What process is involved when you obtain a mortgage for house payments?
Financing.
What area of finance focuses on which assets to invest in for future wealth?
Investments.
What task is Hannah performing in raising funds for a project she recommended?
Making a financing decision.
What is the objective of setting financial goals, like saving for a trip?
To maximize individual utility.
Which professional helps individuals achieve their financial goals?
Financial Planner.
What is Omar doing when deciding how to pay for a new car?
Financing a goal.
What are the purposes of financial markets?
To provide liquidity and determine prices.
Which market trades securities after their initial issuance?
Secondary Market.
What kind of market allows short-term borrowing and lending?
Money Market.
What market will a company use for its initial public offering (IPO)?
Primary Market.
What is the primary role of financial institutions?
To conduct financial transactions such as investments, loans, and deposits.
What is a depository institution?
An institution that accepts and pays interest on deposits and extends loans.
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Flashcard (29)