WGU C214 FINANCIAL MANAGEMENT – NEWEST ACTUAL
FINAL EXAM WITH COMPLETE QUESTIONS WITH ANSWERS
|VERIFIED/GRADED A+/ LATEST UPDATE
What is a Beta?
A Measure of Risk - A Beta 1 is the average risk of all stocks.
Anytime a beta is below 1, it is less risk. If it is more than 1, it is
high risk.
Define efficient market hypothesis as it relates to a firm?
For any company to survive, they need to make profitable
decisions. Otherwise, investors will shun their business. The
firm needs to invest where the return is more than the cost.
What is the intrinsic value of a stock under efficient market
hypothesis?
The intrinsic value of stock is the present value of the stock's
after tax net cash flows.
Whenever the question states that dividend was paid recently
or was just paid, what must be calculated first?
Expected Dividend
Page 1 of 13
, For every Bond question, what must be entered?
FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
What is Capital Budgeting?
Refers to long term investment decision making.
Refers to the process used in making investment decisions
involving projects that generate cash flows over a multi-year
horizon.
What information is needed for capital budgeting?
Initial Outlay
(How much money the company is going to invest in the
company right now)
Differential Annual Cash Flows
(Cash flow that the project will generate year after year)
Terminal Cash Flow
(Cash flow generated at the end of the project)
Define NPV?
Page 2 of 13
FINAL EXAM WITH COMPLETE QUESTIONS WITH ANSWERS
|VERIFIED/GRADED A+/ LATEST UPDATE
What is a Beta?
A Measure of Risk - A Beta 1 is the average risk of all stocks.
Anytime a beta is below 1, it is less risk. If it is more than 1, it is
high risk.
Define efficient market hypothesis as it relates to a firm?
For any company to survive, they need to make profitable
decisions. Otherwise, investors will shun their business. The
firm needs to invest where the return is more than the cost.
What is the intrinsic value of a stock under efficient market
hypothesis?
The intrinsic value of stock is the present value of the stock's
after tax net cash flows.
Whenever the question states that dividend was paid recently
or was just paid, what must be calculated first?
Expected Dividend
Page 1 of 13
, For every Bond question, what must be entered?
FV must be entered as 1000
PMT must be entered as 1000 x Coupon Rate
What is Capital Budgeting?
Refers to long term investment decision making.
Refers to the process used in making investment decisions
involving projects that generate cash flows over a multi-year
horizon.
What information is needed for capital budgeting?
Initial Outlay
(How much money the company is going to invest in the
company right now)
Differential Annual Cash Flows
(Cash flow that the project will generate year after year)
Terminal Cash Flow
(Cash flow generated at the end of the project)
Define NPV?
Page 2 of 13
