Wgu C201 Business Acumen Study Guide Quizzes With Actual Answers.

WGU C201 BUSINESS ACUMEN STUDY
GUIDE QUIZZES WITH ACTUAL
ANSWERS.
What,are,the,two,types,of,divestitures?,,,ANS,-,A,sell-
off,is,a,divestiture,in,which,assets,are,sold,to,another,company.,In,a,spin-
off,,a,new,company,is,created,from,the,assets,divested.,Shareholders,of,the,divesting,company,become,s
hareholders,of,the,new,company,as,well.



What,is,an,LBO?,,,ANS,-
,a,leveraged,buyout,is,a,transaction,in,which,public,shareholders,are,bought,out,,and,the,company,reverts
,to,private,status.,LBOs,are,usually,finance,with,large,amounts,of,borrowed,money.




Define,synergy.,,,ANS,-
,the,term,used,to,describe,the,benefits,produced,by,a,merger,or,acquisition.,It,is,the,notion,that,the,combi
ned,company,is,worth,more,than,the,buyer,and,the,target,are,individually.



Shareholders,of,the,divesting,company,become,shareholders,of,the,new,company,as,a,merger,is,a,combin
ation,of,two,or,more,companies,into,one,company.,An,acquisition,is,a,transaction,in,which,one

company,buys,another.,Even,in,a,merger,,there,is,a,buyer,and,a,seller,(called,the,target).,,,ANS,-
,The,buyer,offers,cash,

securities,,or,a,combination,of,the,two,in,return,for,the,target's,shares.,Mergers,and,acquisitions,should,b
e,evaluated,as

any,large,investment,is:,by,comparing,the,costs,with,the,benefit



Synergy,is,the,term,used,to,describe,the,benefits,a

merger,or,acquisition,is,expected,to,produce.,A,leveraged,buyout,(LBO),is,a,transaction,in,which,shares,ar
e,purchased

from,public,shareholders,,and,the,company,reverts,to,private,status.,Usually,LBOs,are,financed,with,subst
antial,amounts

of,borrowed,funds.,Private,equity,companies,are,often,major,financers,of,LBOs.,,,ANS,-
,Divestitures,are,the,opposite,of,mergers,

, in,which,companies,sell,assets,such,as,subsidiaries,,product,lines,,or,production,facilities.,A,sell-
off,is,a,divestiture,in

which,assets,are,sold,to,another,company.,In,a,spin-
off,,a,new,company,is,created,from,the,assets,divested.



Long-term,funds,are,repaid,over,many,years.,There,are,three,sources:,long-
term,loans,obtained,from,financial,institutions,,bonds,sold,to,investors,,and,equity,financing.,Public,sales,
of,securities,represent,a,major,source,of,funds,for,corporations.,These,securities,can,generally,be,traded,i
n,secondary,markets.,Public,sales,can,vary,substantially,from,year

to,year,depending,on,the,conditions,in,the,financial,markets.,,,ANS,-
,Private,placements,are,securities,sold,to,a,small,number,of

institutional,investors.,Most,private,placements,involve,debt,securities.,Venture,capitalists,are,an,importa
nt,source,of

financing,for,new,companies.,If,the,business,succeeds,,venture,capitalists,stand,to,earn,large,profits



Private,equity,funds,are,investment,companies,that,raise,funds,from,wealthy,individuals,and,institutional,
investors,and,use,the,funds,to,make,investments,in,both,public,and,private,companies.,Unlike,venture,ca
pitalists,,private,equity,funds,invest,in,all,types,of,businesses.,Sovereign,wealth,funds,are,investment,com
panies,owned,by,governments.,,,ANS,-
,What,is,the,most,common,type,of,security,sold,privately?,Corporate,debt,securities,are,the,most,commo
n

type,of,security,sold,privately.



Describe,venture,capitalists,,,ANS,-
,Venture,capitalists,raise,money,from,wealthy,individuals,and,institutional,investors,and,invest,the,funds,i
n,promising,companies.,If,the,business,succeeds,,venture,capitalists,can,earn,substantial,profits.



What,is,a,sovereign,wealth,fund?,,,ANS,-,sovereign,wealth,fund,is,a,government-
owned,investment,company.,These,companies,make,investments,in,a,variety,of,financial,and,real,assets,,
such,as,real,estate.,Although,most

investments,are,based,on,the,best,risk-return,trade-
off,,political,,social,,and,strategic,considerations,play,roles

as,well.