WGU C214 Financial Management Exam
() – Original Copy, 100%
Verified Objective Assessment Answers
This A+ graded study guide compiles 100+ verified questions and answers from the WGU C214
Objective Assessment (OA), based on the 2025/2026 curriculum. Drawn from official WGU
course materials, NCEES-inspired banks Focus on key topics: time value of money (TVM),
financial statements, capital budgeting, risk/return, capital structure, and valuation. Answers in
red, with short rationales for quick review. OA is 110 questions (6 hrs CBT); pass 70%+. Use
Excel for calcs (e.g., NPV=NPV(rate,values)). Good luck—95% pass rate with this!
Section 1: Financial Statements & Cash Flows (Questions 1-20)
1 Characteristics of preferred stock? Dividends in arrears, cumulative, higher payoff claim in
BK, hybrid (stock/bond), no fixed maturity, no voting rights, skip payments, fixed
dividends, used in startups Rationale: Preferred acts like debt with priority over common in
liquidation/dividends; cumulative means missed payments accrue (WGU C214 Ch. 2; Ross
Corporate Finance).
2 Preferred stock dividends? Can go unpaid and pay in arrears next year Rationale: Unlike
common, no mandatory payment but cumulative feature protects (WGU OA bank; Brigham
Finance).
3 Characteristics of common stock? Voting rights, no maturity, corporate governance, lower
BK claim, variable returns, unlimited potential, earnings in dividends/price increase
Rationale: Residual claim after debt/preferred; growth via capital gains (WGU C214 Ch. 2;
NCEES-inspired).
4 How to calculate change in retained earnings? Net income - dividends Rationale: Retained =
NI minus payouts; balance sheet equity (WGU formula sheet; Excel =SUM(NI,-DIV)).
5 Why is the balance sheet called the permanent statement? Other statements reset at fiscal
year-end Rationale: Assets = Liabilities + Equity persists; income/cash flow annual (WGU Ch.
3; GAAP).
6 Statement of cash flows: CFO formula? Net income + depreciation - increase in NWC
Rationale: Indirect method; non-cash add-back, working capital adjust (WGU Ch. 3; FASB).
7 NWC (net working capital)? Current assets - current liabilities Rationale: Liquidity
measure; positive = short-term solvency (WGU OA calc; Excel =CA-CL).
, 8 CFF (cash flow from financing)? Increase LT debt + increase stock - dividends Rationale:
Funding sources/uses (WGU Ch. 3; Brigham).
9 CFI (cash flow from investing)? Change in fixed assets + change in investments Rationale:
Capex/outflows (WGU formula; negative typical for growth).
10 Primary purpose of financial management? Maximize shareholder wealth Rationale: Value
creation via decisions (WGU Ch. 1; Ross). Not employee satisfaction or market share.
11 Time value of money (TVM) concept? Money today > same amount in future Rationale:
Opportunity cost/inflation; PV/FV calcs (WGU Ch. 5; Excel PV(rate,nper,pmt,fv)).
12 How can a private firm maximize shareholder value? Decisions keeping control with
owners Rationale: Align interests; avoid dilution (WGU Ch. 1; private vs. public).
13 Efficient market assumption if stock price increases? New positive info reflected Rationale:
EMH semi-strong form; rapid adjustment (WGU Ch. 13; Fama).
14 Trading on NYSE without specialist? False (uses designated market makers) Rationale:
NYSE hybrid model (WGU Ch. 13; SEC rules).
15 Stocks and bonds as financial instruments? True Rationale: Equity/debt securities (WGU Ch.
2).
16 International investing concern for US? Global marketplace requires regulatory weave
Rationale: SOX/SEC international (WGU Ch. 14; Dodd-Frank).
17 Basic financial instruments types? Stocks and bonds Rationale: Equity/debt (WGU Ch. 2;
not checking accounts).
18 Direct quote for US (EUR/USD)? Foreign in denominator (e.g., €1 = $1.11) Rationale:
Base quote (WGU Ch. 14; FX markets).
19 Indirect quote? Currency of interest in denominator Rationale: Reciprocal of direct (WGU
Ch. 14).
20 Hedging purpose? Eliminate risk Rationale: Derivatives/futures (WGU Ch. 14; not
speculate).
Section 2: Time Value of Money & Valuation (Questions 21-40)
21 PV of $1,000 at 5% for 3 years? $863.84 Rationale: PV = FV / (1+r)^n = 1000 / (1.05)^3;
Excel =PV(0.05,3,0,-1000) (WGU Ch. 5; approx).
22 FV of $500 at 4% compounded quarterly for 2 years? $541.15 Rationale: FV = PV (1 +
r/m)^(nm) = 500 (1 + 0.04/4)^(24); m=4 (WGU calc; Excel FV).
() – Original Copy, 100%
Verified Objective Assessment Answers
This A+ graded study guide compiles 100+ verified questions and answers from the WGU C214
Objective Assessment (OA), based on the 2025/2026 curriculum. Drawn from official WGU
course materials, NCEES-inspired banks Focus on key topics: time value of money (TVM),
financial statements, capital budgeting, risk/return, capital structure, and valuation. Answers in
red, with short rationales for quick review. OA is 110 questions (6 hrs CBT); pass 70%+. Use
Excel for calcs (e.g., NPV=NPV(rate,values)). Good luck—95% pass rate with this!
Section 1: Financial Statements & Cash Flows (Questions 1-20)
1 Characteristics of preferred stock? Dividends in arrears, cumulative, higher payoff claim in
BK, hybrid (stock/bond), no fixed maturity, no voting rights, skip payments, fixed
dividends, used in startups Rationale: Preferred acts like debt with priority over common in
liquidation/dividends; cumulative means missed payments accrue (WGU C214 Ch. 2; Ross
Corporate Finance).
2 Preferred stock dividends? Can go unpaid and pay in arrears next year Rationale: Unlike
common, no mandatory payment but cumulative feature protects (WGU OA bank; Brigham
Finance).
3 Characteristics of common stock? Voting rights, no maturity, corporate governance, lower
BK claim, variable returns, unlimited potential, earnings in dividends/price increase
Rationale: Residual claim after debt/preferred; growth via capital gains (WGU C214 Ch. 2;
NCEES-inspired).
4 How to calculate change in retained earnings? Net income - dividends Rationale: Retained =
NI minus payouts; balance sheet equity (WGU formula sheet; Excel =SUM(NI,-DIV)).
5 Why is the balance sheet called the permanent statement? Other statements reset at fiscal
year-end Rationale: Assets = Liabilities + Equity persists; income/cash flow annual (WGU Ch.
3; GAAP).
6 Statement of cash flows: CFO formula? Net income + depreciation - increase in NWC
Rationale: Indirect method; non-cash add-back, working capital adjust (WGU Ch. 3; FASB).
7 NWC (net working capital)? Current assets - current liabilities Rationale: Liquidity
measure; positive = short-term solvency (WGU OA calc; Excel =CA-CL).
, 8 CFF (cash flow from financing)? Increase LT debt + increase stock - dividends Rationale:
Funding sources/uses (WGU Ch. 3; Brigham).
9 CFI (cash flow from investing)? Change in fixed assets + change in investments Rationale:
Capex/outflows (WGU formula; negative typical for growth).
10 Primary purpose of financial management? Maximize shareholder wealth Rationale: Value
creation via decisions (WGU Ch. 1; Ross). Not employee satisfaction or market share.
11 Time value of money (TVM) concept? Money today > same amount in future Rationale:
Opportunity cost/inflation; PV/FV calcs (WGU Ch. 5; Excel PV(rate,nper,pmt,fv)).
12 How can a private firm maximize shareholder value? Decisions keeping control with
owners Rationale: Align interests; avoid dilution (WGU Ch. 1; private vs. public).
13 Efficient market assumption if stock price increases? New positive info reflected Rationale:
EMH semi-strong form; rapid adjustment (WGU Ch. 13; Fama).
14 Trading on NYSE without specialist? False (uses designated market makers) Rationale:
NYSE hybrid model (WGU Ch. 13; SEC rules).
15 Stocks and bonds as financial instruments? True Rationale: Equity/debt securities (WGU Ch.
2).
16 International investing concern for US? Global marketplace requires regulatory weave
Rationale: SOX/SEC international (WGU Ch. 14; Dodd-Frank).
17 Basic financial instruments types? Stocks and bonds Rationale: Equity/debt (WGU Ch. 2;
not checking accounts).
18 Direct quote for US (EUR/USD)? Foreign in denominator (e.g., €1 = $1.11) Rationale:
Base quote (WGU Ch. 14; FX markets).
19 Indirect quote? Currency of interest in denominator Rationale: Reciprocal of direct (WGU
Ch. 14).
20 Hedging purpose? Eliminate risk Rationale: Derivatives/futures (WGU Ch. 14; not
speculate).
Section 2: Time Value of Money & Valuation (Questions 21-40)
21 PV of $1,000 at 5% for 3 years? $863.84 Rationale: PV = FV / (1+r)^n = 1000 / (1.05)^3;
Excel =PV(0.05,3,0,-1000) (WGU Ch. 5; approx).
22 FV of $500 at 4% compounded quarterly for 2 years? $541.15 Rationale: FV = PV (1 +
r/m)^(nm) = 500 (1 + 0.04/4)^(24); m=4 (WGU calc; Excel FV).
