Question

Finance professionals make decisions that fall into three distinctive areas: corporate finance, capital markets, and investments. Below is a set of decisions made by finance professionals. Categorize the decisions according to the area of finance to which they belong.

1. As a technical trainer, you will be analyzing investor psychology and making investment decisions based on how investors behave during certain situations.
a. Corporate finance
b. Capital markets
c. Investments
2. Wilson works for an investment bank and makes decisions about the sale of new common stock by ABCL Inc.
a. Corporate finance
b. Capital markets
c. Investments
3. Jacob must make a decision on how to cut cost so that his company can generate extra cash flow to acquire assets.
a. Corporate finance
b. Capital markets
c. Investments

Answer 1

1. As a technical trainer, you will be analyzing investor psychology and making investment decisions based on how investors behave during certain situations. - c. Investments

The area is investments because the main focus of the activities is to analyze investor psychology in order to determine investing patterns.

2. Wilson works for an investment bank and makes decisions about the sale of new common stock by ABCL Inc. - b. Capital markets

Investment banks are part of the capital markets, and Wilson as a worker of the investment bank, decides about what goods (stock) to buy and sell in that market.

3. Jacob must make a decision on how to cut cost so that his company can generate extra cash flow to acquire assets. - a. Corporate finance

Jacob is probably a financial analyst at a corporation. His work deals primarily with decisions that involve the use of corporate resources, therefore, he works in corporate finance.