What is the study of managing money and making decisions called?
Finance
What are the three key financial decisions businesses make?
capital budgeting, capital structure, working capital management
What is the relationship between risk and return?
Higher risk often mean higher return
What is the money you earn from an investment called?
Return
Which decision area helps manage day-to-day finances?
Working capital management
What are the three main areas of finance?
business finance, investments, financial institutions
Which decision is about how to fund the business?
What is a risk-averse investor?
One who prefers lower risk and is willing to accept lower return
What is a government bond?
A low-risk investment backed by the government
Which decision deals with whether to invest in a new building?
Capital budgeting
True or False:
Finance only applies to businesses.
False
What decision involves managing short-term cash flow?
Working capital management
What kind of risk can be reduced through diversification?
Diversifiable risk
Which investment might have the highest potential return?
Tech startup stock
What is equity financing?
Raising money by selling shares of stock
What is an example of using finance?
managing debt, investments, budgeting, etc.
What is capital budgeting used for?
Evaluating long-term investments
Give an example of non-diversifiable risk.
Market crash, inflation
What does diversification mean?
Spreading investments to reduce risk
What is debt financing?
Raising money by borrowing (loans, bonds)
Why is it important to study finance?
To make informed decisions about money.
Name one example of a capital structure decision.
Taking out a loan, issuing stock
Name two types of investment risk.
Default risk, inflation risk, political risk, etc.
What kind of return would you expect from a savings account?
Low return
Which is riskier:investing in a startup or buying a government bond?
Investing in a startup