WGU D775 PRE-ASSESSMENT 2 EXAM QUESTIONS - VERIFIED
ANSWERS - EVERYTHING YOU NEED TO PASS
What is the time orientation of financial decision-making in business finance?
Future projections and planning.
How do businesses use financial ratios in their operations? To evaluate and
improve business performance.
What is a primary objective of business finance? Maximizing shareholder value.
What are corporate bonds used for? Financing operations and expansions.
What are financial derivatives based on? Performance of underlying assets,
indexes, or rates.
What is a future as a type of financial derivative? A standardized contract to buy
or sell an asset at a specified future date and price.
What distinguishes hedge funds from mutual funds? They employ diverse
strategies and are available to sophisticated investors.
How do funds achieve diversification? By pooling money from multiple
investors to invest in a variety of assets.
What do speculative bonds, or junk bonds, typically offer compared to
investment-grade bonds? Higher risk and higher returns.
What is the advantage of investing in exchange-traded funds (ETFs)? They can
be bought and sold throughout the trading day like stocks.
Which market is an example of a dealer market? National Association of
Securities Dealers Automated Quotations (NASDAQ).
Which market is an example of an auction market? New York Stock Exchange.
, What is the primary function of the Securities and Exchange Commission
(SEC)? To regulate securities markets and protect investors.
What is the primary focus of the Commodity Futures Trading Commission
(CFTC)? Overseeing futures and options markets.
Which role do insurance companies play in the financial system? Underwriting
policies to protect against risks.
How do insurance companies generate income? By collecting premiums and
investing these funds.
What is a key characteristic of private equity raising? It involves securing funds
from private investors like venture capitalists.
What does legal compliance ensure in finance? It ensures adherence to laws and
regulations.
What is corporate social responsibility (CSR)? The obligation to contribute
positively to society.
Which principle should guide business professionals in ethical dilemmas?
Upholding honesty, fairness, and accountability.
Why are financial ratios significant in assessing risk? They identify potential
economic hazards within the company.
Why might investors use financial ratios for decision-making? To assess the
potential return on investment.
What is the key purpose of financial ratios in investment analysis? To evaluate
the company's profitability and growth prospects.
What do market ratios evaluate? Stock performance.
Why do companies use market ratios? To analyze stock value.
What does a low quick ratio indicate about a company's liquidity? Reliance on
inventory.
What does a high cash ratio imply about a company's short-term financial
health? Immediate debt coverage.
What is the focus of the times interest earned (TIE) ratio? Earnings covering
debt payments.
ANSWERS - EVERYTHING YOU NEED TO PASS
What is the time orientation of financial decision-making in business finance?
Future projections and planning.
How do businesses use financial ratios in their operations? To evaluate and
improve business performance.
What is a primary objective of business finance? Maximizing shareholder value.
What are corporate bonds used for? Financing operations and expansions.
What are financial derivatives based on? Performance of underlying assets,
indexes, or rates.
What is a future as a type of financial derivative? A standardized contract to buy
or sell an asset at a specified future date and price.
What distinguishes hedge funds from mutual funds? They employ diverse
strategies and are available to sophisticated investors.
How do funds achieve diversification? By pooling money from multiple
investors to invest in a variety of assets.
What do speculative bonds, or junk bonds, typically offer compared to
investment-grade bonds? Higher risk and higher returns.
What is the advantage of investing in exchange-traded funds (ETFs)? They can
be bought and sold throughout the trading day like stocks.
Which market is an example of a dealer market? National Association of
Securities Dealers Automated Quotations (NASDAQ).
Which market is an example of an auction market? New York Stock Exchange.
, What is the primary function of the Securities and Exchange Commission
(SEC)? To regulate securities markets and protect investors.
What is the primary focus of the Commodity Futures Trading Commission
(CFTC)? Overseeing futures and options markets.
Which role do insurance companies play in the financial system? Underwriting
policies to protect against risks.
How do insurance companies generate income? By collecting premiums and
investing these funds.
What is a key characteristic of private equity raising? It involves securing funds
from private investors like venture capitalists.
What does legal compliance ensure in finance? It ensures adherence to laws and
regulations.
What is corporate social responsibility (CSR)? The obligation to contribute
positively to society.
Which principle should guide business professionals in ethical dilemmas?
Upholding honesty, fairness, and accountability.
Why are financial ratios significant in assessing risk? They identify potential
economic hazards within the company.
Why might investors use financial ratios for decision-making? To assess the
potential return on investment.
What is the key purpose of financial ratios in investment analysis? To evaluate
the company's profitability and growth prospects.
What do market ratios evaluate? Stock performance.
Why do companies use market ratios? To analyze stock value.
What does a low quick ratio indicate about a company's liquidity? Reliance on
inventory.
What does a high cash ratio imply about a company's short-term financial
health? Immediate debt coverage.
What is the focus of the times interest earned (TIE) ratio? Earnings covering
debt payments.
