WGU C214 FINANCIAL MANAGEMENT
OA EXAM STUDY GUIDE 2026/2027
COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
1. What is a potential negative consequence if the firm focuses solely on profit
maximization ? - ANSWER ✔ Unethical behavior and potential scandals
profit
2. How might a privately held company define shareholder value differently
from a publicly held company ? - ANSWER ✔ Privately held companies
may value keeping the business within the family .
3. What effect does a currency devaluation have on a country's international
trade ? - ANSWER ✔ It makes a country's exports cheaper internationally
4. How does global financing integration benefit corporations ? - ANSWER ✔
It provides access to a wider range of funding sources and investment
opportunities . Global financing
5. What is an auction market in secondary financial markets ? - ANSWER ✔ A
market that operates where prices are determined by the highest bidder
,6. Why are efficient , well - developed financial markets important for stock
pricing ? - ANSWER ✔ They produce more reliable stock prices .
7. Which factor is most likely to lead a company to increase its leverage ? -
ANSWER ✔ Asset intangibility
8. What impact does company size have on capital structure ? - ANSWER ✔
Larger companies can often borrow at lower rates .
9. How does a just - in - time ( JIT ) inventory system affect a firm's working
capital requirement ? - ANSWER ✔ It reduces the amount of working
capital tied up in inventory .
10.Which financial ratio is best used to assess the efficiency of a firm's credit
policy ? - ANSWER ✔ Receivables turnover
11.What is float in cash management ? - ANSWER ✔ The time delay between
writing a check and the actual cash outflow
12.What is the operating balance in the context of cash management ? -
ANSWER ✔ The amount of cash the firm needs to pay its immediate bills
13.Why should a firm not carry too much cash ? - ANSWER ✔ To avoid
incurring large opportunity costs
,14.What is a key consideration when setting credit terms ? - ANSWER ✔ The
impact on the firm's cash cycle and cash needs
15.What is a primary cost consideration when deciding on the level of
inventory to hold ? - ANSWER ✔ The trade - off between holding costs and
the risk of stockouts
16.Foreign corrupt practices act 1977 - ANSWER ✔ Prohibits American
companies from bribing foreign officials.
17.Talia is considering purchasing a small , local construction company . When
reviewing the financials , she notices that although the company produced $
200,000 in net income during the last year , the retained earnings increased
by only $ 50,000 . Which scenario would explain why the change in retained
earnings from the previous year did not increase by the total income earned -
ANSWER ✔ The remaining earnings were paid out as dividends to
shareholders .
18.Supply and demand factors suggest the slope for an individual asset in the
portfolio will equal the slope of the market portfolio itself. What is the
significance of this equalization?
A. The entire risk-return slope will decrease over time
B. Investors will be forced to frequently shift their portfolios
C. Investors will be incentivized to hold the market portfolio
, D. The slope of the individual assets in a portfolio will diverge to
increase diversification. - ANSWER ✔ c
19.What are the components required in calculating weighted average cost of
capital (WACC)? Choose 3
A. The market cap of the company
B. The desired growth rate
C. The value of the preferred stock and debt
D. The firms market value
E The marginal tax rate
F The combined total expected growth rate
The amount and required return for common equity, preferred equity and
debt - ANSWER ✔ c,d, e
20.What advantage does the Gordon Growth Model have compared to the
capital asset pricing model (CAPM)?
A. It is highly accurate in predicting future growth
B. It requires assumptions about growth that benefit fast-growing
companies
C. It provides an easier to understand and relatively accurate forecast
when growth rates are stable
D. It requires the use of accurate known factors, such future as growth
rates. - ANSWER ✔ c
21.How does the weighted average cost of capital affect a company's growth
opportunities?
OA EXAM STUDY GUIDE 2026/2027
COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
1. What is a potential negative consequence if the firm focuses solely on profit
maximization ? - ANSWER ✔ Unethical behavior and potential scandals
profit
2. How might a privately held company define shareholder value differently
from a publicly held company ? - ANSWER ✔ Privately held companies
may value keeping the business within the family .
3. What effect does a currency devaluation have on a country's international
trade ? - ANSWER ✔ It makes a country's exports cheaper internationally
4. How does global financing integration benefit corporations ? - ANSWER ✔
It provides access to a wider range of funding sources and investment
opportunities . Global financing
5. What is an auction market in secondary financial markets ? - ANSWER ✔ A
market that operates where prices are determined by the highest bidder
,6. Why are efficient , well - developed financial markets important for stock
pricing ? - ANSWER ✔ They produce more reliable stock prices .
7. Which factor is most likely to lead a company to increase its leverage ? -
ANSWER ✔ Asset intangibility
8. What impact does company size have on capital structure ? - ANSWER ✔
Larger companies can often borrow at lower rates .
9. How does a just - in - time ( JIT ) inventory system affect a firm's working
capital requirement ? - ANSWER ✔ It reduces the amount of working
capital tied up in inventory .
10.Which financial ratio is best used to assess the efficiency of a firm's credit
policy ? - ANSWER ✔ Receivables turnover
11.What is float in cash management ? - ANSWER ✔ The time delay between
writing a check and the actual cash outflow
12.What is the operating balance in the context of cash management ? -
ANSWER ✔ The amount of cash the firm needs to pay its immediate bills
13.Why should a firm not carry too much cash ? - ANSWER ✔ To avoid
incurring large opportunity costs
,14.What is a key consideration when setting credit terms ? - ANSWER ✔ The
impact on the firm's cash cycle and cash needs
15.What is a primary cost consideration when deciding on the level of
inventory to hold ? - ANSWER ✔ The trade - off between holding costs and
the risk of stockouts
16.Foreign corrupt practices act 1977 - ANSWER ✔ Prohibits American
companies from bribing foreign officials.
17.Talia is considering purchasing a small , local construction company . When
reviewing the financials , she notices that although the company produced $
200,000 in net income during the last year , the retained earnings increased
by only $ 50,000 . Which scenario would explain why the change in retained
earnings from the previous year did not increase by the total income earned -
ANSWER ✔ The remaining earnings were paid out as dividends to
shareholders .
18.Supply and demand factors suggest the slope for an individual asset in the
portfolio will equal the slope of the market portfolio itself. What is the
significance of this equalization?
A. The entire risk-return slope will decrease over time
B. Investors will be forced to frequently shift their portfolios
C. Investors will be incentivized to hold the market portfolio
, D. The slope of the individual assets in a portfolio will diverge to
increase diversification. - ANSWER ✔ c
19.What are the components required in calculating weighted average cost of
capital (WACC)? Choose 3
A. The market cap of the company
B. The desired growth rate
C. The value of the preferred stock and debt
D. The firms market value
E The marginal tax rate
F The combined total expected growth rate
The amount and required return for common equity, preferred equity and
debt - ANSWER ✔ c,d, e
20.What advantage does the Gordon Growth Model have compared to the
capital asset pricing model (CAPM)?
A. It is highly accurate in predicting future growth
B. It requires assumptions about growth that benefit fast-growing
companies
C. It provides an easier to understand and relatively accurate forecast
when growth rates are stable
D. It requires the use of accurate known factors, such future as growth
rates. - ANSWER ✔ c
21.How does the weighted average cost of capital affect a company's growth
opportunities?
