WGU C214 FINANCIAL MGMT PASS THE
OA, WELL ANALYSED QUESTIONS WITH
VERIFIED SOLUTIONS GRADED A+ 2026
Characteristics of preferred stock includes ANSWER >> -dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
1
,-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends ANSWER >> can go without payment and pay in arrears the
following year
Characteristics of common stock are ANSWER >> -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue ANSWER >> preferred stock (in an IPO)
What stock is considered a hybrid ANSWER >> preferred stock
2
, One thing common stock and preferred stock have in common is ANSWER >> both
have no maturity date
Which type of security has voting rights ANSWER >> common stock
Debt covenants and restrictions help to ensure that ANSWER >> management is
meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds ANSWER >> -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 ANSWER >> required rate of return is equal to the
coupon rate
Why are bonds the primary method for raising capital ANSWER >> because bonds
remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
What type of bond can be traded for stock ANSWER >> convertible bonds
3
OA, WELL ANALYSED QUESTIONS WITH
VERIFIED SOLUTIONS GRADED A+ 2026
Characteristics of preferred stock includes ANSWER >> -dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
1
,-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends ANSWER >> can go without payment and pay in arrears the
following year
Characteristics of common stock are ANSWER >> -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue ANSWER >> preferred stock (in an IPO)
What stock is considered a hybrid ANSWER >> preferred stock
2
, One thing common stock and preferred stock have in common is ANSWER >> both
have no maturity date
Which type of security has voting rights ANSWER >> common stock
Debt covenants and restrictions help to ensure that ANSWER >> management is
meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds ANSWER >> -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 ANSWER >> required rate of return is equal to the
coupon rate
Why are bonds the primary method for raising capital ANSWER >> because bonds
remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
What type of bond can be traded for stock ANSWER >> convertible bonds
3
