WGU C214 Financial Management Pass the OA questions and answers 2025

WGU C214 Financial Management Pass the
OA 2025
Characteristics of preferred stock includes - ANSWER -dividends in arrears
O O O O O O O O O




-dividends are cumulative O O




-higher payoff claim in a BK (has first dibs in a BK)
O O O O O O O O O O O




-considered "hybrid" (part stock/part bond)
O O O O




-no fixed maturity date
O O O




-no voting rights
O O




-can skip dividend payments
O O O




-dividends don't change year-after-year
O O O




-used in start ups (IPO)
O O O O




Preferred stock dividends - O O O



ANSWER can go without payment and pay in arrears the following year
O O O O O O O O O O O O




Characteristics of common stock are - ANSWER -voting rights
O O O O O O O O




-no maturity date
O O




-corporate governance O




-lower payoff claim in BK
O O O O




-variable returns O




-unlimited earnings potential O O




-earnings are in dividends & the increase in price of stock
O O O O O O O O O O




New start up ventures often issue - ANSWER preferred stock (in an IPO)
O O O O O O O O O O O O

,What stock is considered a hybrid - ANSWER preferred stock
O O O O O O O O O




One thing common stock and preferred stock have in common is -
O O O O O O O O O O O



ANSWER both have no maturity date
O O O O O O




Which type of security has voting rights - ANSWER common stock
O O O O O O O O O O




Debt covenants and restrictions help to ensure that -
O O O O O O O O



ANSWER management is meeting bond and shareholder expectations
O O O O O O O O




NOTE: covenants are promises meant to be kept
O O O O O O O




What is true regarding bonds - ANSWER -when bond matures, bondholder gets lump sum back
O O O O O O O O O O O O O O




-coupon rate doesn't change O O O




-maturity is in years O O O




-PAR value is typically $1000
O O O O




-Future value (same as PAR) is typically $1000
O O O O O O O




Bond sells at face value when - ANSWER required rate of return is equal to the coupon rate
O O O O O O O O O O O O O O O O O




Why are bonds the primary method for raising capital -
O O O O O O O O O



ANSWER because bonds remove the intermediary costs
O O O O O O O




NOTE: IPO's require an intermediary known as a syndicate -
O O O O O O O O O



a group of banks underwriting the security issue
O O O O O O O O




What type of bond can be traded for stock - ANSWER convertible bonds
O O O O O O O O O O O O




What is the interest rate for annual payments of a bond known as - ANSWER the coupon rate
O O O O O O O O O O O O O O O O O

, NOTE: coupon rate is the established interest rate for the life of the bond and will remain uncha
O O O O O O O O O O O O O O O O O



nged



Coupon rate is the established rate of the bond and should - ANSWER never change
O O O O O O O O O O O O O O




Debentures are - ANSWER secured bonds O O O O O




NOTE: debentures are a debt instrument (bond) issued to raise cash, secured against a company
O O O O O O O O O O O O O O



's assets and backed by credit, transferable by the holder, and may also be unsecured
O O O O O O O O O O O O O O




Secured loan - ANSWER has collateral like a mortgage
O O O O O O O O




The amount repaid at the expiration date of a bond is - ANSWER PAR value
O O O O O O O O O O O O O O




NOTE: expiration date is also known as maturity date PAR (or Face Value) is typically $1000
O O O O O O O O O O O O O O O




Duration measures - O O



ANSWER the market risk of a bond and is the percentage drop in price caused by a 1% increase i
O O O O O O O O O O O O O O O O O O O O



n yield (rate)
O O




NOTE: measurement of the drop in price after a rate increase
O O O O O O O O O O




Maturity of bonds is calculated in - ANSWER years
O O O O O O O O




A bond premium occurs when -
O O O O O



ANSWER bonds are issued for an amount greater than their face or maturity amount; caused by
O O O O O O O O O O O O O O O O



the bonds having a stated interest rate that is higher than the market interest rate for similar bo
O O O O O O O O O O O O O O O O O O



nds



Junk Bonds are - ANSWER high yield bonds without any stability
O O O O O O O O O O