WGU C214 Financial Mgmt Pass the OA/ This Quizlet
does not contain valua!on/calcula!on problems LATEST
2025/2026 NEW!!
Characteris cs of preferred stock includes - Answers -dividends in arrears
-dividends are cumula ve
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no vo ng rights
-can skip dividend payments
-dividends don't change year-a&er-year
-used in start ups (IPO)
Preferred stock dividends - Answers can go without payment and pay in arrears the following
year
Characteris cs of common stock are - Answers -vo ng rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings poten al
-earnings are in dividends & the increase in price of stock
,New start up ventures o&en issue - Answers preferred stock (in an IPO)
What stock is considered a hybrid - Answers preferred stock
One thing common stock and preferred stock have in common is - Answers both have no
maturity date
Which type of security has vo ng rights - Answers common stock
Debt covenants and restric ons help to ensure that - Answers management is mee ng bond
and shareholder expecta ons
NOTE: covenants are promises meant to be kept
What is true regarding bonds - Answers -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 - Answers required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital - Answers because bonds remove the
intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks underwri ng the
security issue
, What type of bond can be traded for stock - Answers conver ble bonds
What is the interest rate for annual payments of a bond known as - Answers 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 - Answers never change
Debentures are - Answers 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 - Answers has collateral like a mortgage
The amount repaid at the expira on date of a bond is - Answers PAR value
NOTE: expira on date is also known as maturity date PAR (or Face Value) is typically $1000
Dura on measures - Answers the market risk of a bond and is the percentage drop in price
caused by a 1% increase in yield (rate)
NOTE: measurement of the drop in price a&er a rate increase
Maturity of bonds is calculated in - Answers years
A bond premium occurs when - Answers bonds are issued for an amount greater than their
face or maturity amount; caused by the bonds having a stated interest rate that is higher than
the market interest rate for similar bonds
does not contain valua!on/calcula!on problems LATEST
2025/2026 NEW!!
Characteris cs of preferred stock includes - Answers -dividends in arrears
-dividends are cumula ve
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no vo ng rights
-can skip dividend payments
-dividends don't change year-a&er-year
-used in start ups (IPO)
Preferred stock dividends - Answers can go without payment and pay in arrears the following
year
Characteris cs of common stock are - Answers -vo ng rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings poten al
-earnings are in dividends & the increase in price of stock
,New start up ventures o&en issue - Answers preferred stock (in an IPO)
What stock is considered a hybrid - Answers preferred stock
One thing common stock and preferred stock have in common is - Answers both have no
maturity date
Which type of security has vo ng rights - Answers common stock
Debt covenants and restric ons help to ensure that - Answers management is mee ng bond
and shareholder expecta ons
NOTE: covenants are promises meant to be kept
What is true regarding bonds - Answers -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 - Answers required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital - Answers because bonds remove the
intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks underwri ng the
security issue
, What type of bond can be traded for stock - Answers conver ble bonds
What is the interest rate for annual payments of a bond known as - Answers 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 - Answers never change
Debentures are - Answers 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 - Answers has collateral like a mortgage
The amount repaid at the expira on date of a bond is - Answers PAR value
NOTE: expira on date is also known as maturity date PAR (or Face Value) is typically $1000
Dura on measures - Answers the market risk of a bond and is the percentage drop in price
caused by a 1% increase in yield (rate)
NOTE: measurement of the drop in price a&er a rate increase
Maturity of bonds is calculated in - Answers years
A bond premium occurs when - Answers bonds are issued for an amount greater than their
face or maturity amount; caused by the bonds having a stated interest rate that is higher than
the market interest rate for similar bonds
