WGU C214 OA FINANCIAL MANAGEMENT
FINAL PAPER COMPLETE QUESTIONS
◉ Preferred stock dividends. Answer: can go without payment and
pay in arrears the following year
◉ Characteristics of common stock are. Answer: -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
◉ New start up ventures often issue. Answer: preferred stock (in an
IPO)
◉ What stock is considered a hybrid. Answer: preferred stock
◉ One thing common stock and preferred stock have in common is.
Answer: both have no maturity date
,◉ Which type of security has voting rights. Answer: common stock
◉ Debt covenants and restrictions help to ensure that. Answer:
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
◉ What is true regarding bonds. Answer: -when bond matures,
bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
◉ Bond sells at face value when. Answer: required rate of return is
equal to the coupon rate
◉ Why are bonds the primary method for raising capital. Answer:
because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group
of banks underwriting the security issue
, ◉ What type of bond can be traded for stock. Answer: convertible
bonds
◉ What is the interest rate for annual payments of a bond known as.
Answer: the coupon rate
NOTE: coupon rate is the established interest rate for the life of the
bond and will remain unchanged
◉ Coupon rate is the established rate of the bond and should.
Answer: never change
◉ Debentures are. Answer: secured bonds
NOTE: debentures are a debt instrument (bond) issued to raise cash,
secured against a company's assets and backed by credit,
transferable by the holder, and may also be unsecured
◉ Secured loan. Answer: has collateral like a mortgage
◉ The amount repaid at the expiration date of a bond is. Answer:
PAR value
NOTE: expiration date is also known as maturity date PAR (or Face
Value) is typically $1000
FINAL PAPER COMPLETE QUESTIONS
◉ Preferred stock dividends. Answer: can go without payment and
pay in arrears the following year
◉ Characteristics of common stock are. Answer: -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
◉ New start up ventures often issue. Answer: preferred stock (in an
IPO)
◉ What stock is considered a hybrid. Answer: preferred stock
◉ One thing common stock and preferred stock have in common is.
Answer: both have no maturity date
,◉ Which type of security has voting rights. Answer: common stock
◉ Debt covenants and restrictions help to ensure that. Answer:
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
◉ What is true regarding bonds. Answer: -when bond matures,
bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
◉ Bond sells at face value when. Answer: required rate of return is
equal to the coupon rate
◉ Why are bonds the primary method for raising capital. Answer:
because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group
of banks underwriting the security issue
, ◉ What type of bond can be traded for stock. Answer: convertible
bonds
◉ What is the interest rate for annual payments of a bond known as.
Answer: the coupon rate
NOTE: coupon rate is the established interest rate for the life of the
bond and will remain unchanged
◉ Coupon rate is the established rate of the bond and should.
Answer: never change
◉ Debentures are. Answer: secured bonds
NOTE: debentures are a debt instrument (bond) issued to raise cash,
secured against a company's assets and backed by credit,
transferable by the holder, and may also be unsecured
◉ Secured loan. Answer: has collateral like a mortgage
◉ The amount repaid at the expiration date of a bond is. Answer:
PAR value
NOTE: expiration date is also known as maturity date PAR (or Face
Value) is typically $1000
