WGU C214 OA FINANCIAL MANAGEMENT
EXAM QUESTIONS AND ANSWERS
UPDATED (2026) (VERIFIED ANSWERS)
WGU C214 Financial Management OA Questions (1–50)
1. The stock price of a company increases and the market is deemed
efficient. What assumption can be made?
A. A new, patented, product was introduced to the market.
B. New machinery was purchased with a useful life of 20 years.
C. Management is optimizing its resources and operating efficiently. ✅
D. Management hired new employees and invested in a training program.
Rationale: In an efficient market, stock prices reflect all publicly available
information. A rising stock price indicates that investors perceive management as
optimizing resources and operating efficiently. While product launches, machinery
purchases, or training programs may contribute, the key assumption in an efficient
market is that management efficiency is already priced in.
2. Which statement is true about how the global market affects the U.S.?
A. A bad options trade executed by a foreign subsidiary of a Wall Street bank will
affect layoffs overseas.
B. A Bad derivatives trade executed by a foreign subsidiary of a Wall Street bank will
affect layoffs overseas. ✅
C. American investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
D. Foreign investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
Rationale: The global financial market is interconnected, and a poor derivatives
trade overseas can impact financial institutions globally. This may lead to layoffs both
,domestically and abroad. U.S. investors are affected indirectly through global
exposure, showing the systemic risk of global markets.
3. What are secondary markets?
A. Markets where securities are traded subsequent to the initial offering. ✅
B. Markets where securities are issued for the first time.
C. Markets where securities are issued through a competitive sale.
D. Markets where securities are issued through a negotiated sale.
Rationale: Secondary markets involve the trading of existing securities after the
initial issuance (IPO). These markets provide liquidity to investors and allow price
discovery. In contrast, primary markets are where securities are issued for the first
time.
4. A special interest group in the U.S. has been lobbying for protectionism
through tariffs and trade restrictions to save jobs. What is the most likely
result if successful?
A. Employees and shareholders of the domestic industry that produce the protective
goods will be hurt and the nation will benefit.
B. The overall economy will benefit from trade restrictions and tariffs.
C. Removing the trade restrictions and tariffs will result in a net economic loss to the
overall U.S. economy.
D. Employees and shareholders of the domestic industry that produce the protected
goods will benefit and the nation will be hurt. ✅
Rationale: Protectionist measures may benefit a specific domestic industry in the
short term but often hurt the overall economy by raising prices, reducing
competition, and decreasing efficiency. Economic theory and empirical evidence show
that tariffs generally benefit a small sector at the cost of the wider population.
, 5. What do the content and structure of a balance sheet report?
A. Revenues and expenses over a period of time.
B. Assets, liabilities, and equity at a point in time. ✅
C. Cash inflows and outflows from operations.
D. Market trends and stock valuation.
Rationale: The balance sheet provides a snapshot of a company’s financial
position at a specific point in time, including assets, liabilities, and equity. It
differs from the income statement (flows) or cash flow statement (inflows/outflows).
6. What is the basis used to compute a company's income tax expense?
A. Pretax accounting income ✅
B. Taxable income
C. Net operating income
D. Taxes payable
Rationale: Income tax expense is calculated based on pretax accounting
income, which is the income before taxes are deducted. Taxable income may differ
due to temporary and permanent differences from accounting rules, but for reporting
purposes, the expense is linked to accounting income.
7. What is the firm’s cash flow from financing, using the data below?
Data:
Net Income = $1,000
Depreciation Expense = $300
Change in Operating Assets = $600
Change in Net PP&E = $5,000
Change in Long-term Liabilities = $1,000
Dividends Paid = $200
Cash flow from financing = Change in Long-term Liabilities – Dividends Paid
EXAM QUESTIONS AND ANSWERS
UPDATED (2026) (VERIFIED ANSWERS)
WGU C214 Financial Management OA Questions (1–50)
1. The stock price of a company increases and the market is deemed
efficient. What assumption can be made?
A. A new, patented, product was introduced to the market.
B. New machinery was purchased with a useful life of 20 years.
C. Management is optimizing its resources and operating efficiently. ✅
D. Management hired new employees and invested in a training program.
Rationale: In an efficient market, stock prices reflect all publicly available
information. A rising stock price indicates that investors perceive management as
optimizing resources and operating efficiently. While product launches, machinery
purchases, or training programs may contribute, the key assumption in an efficient
market is that management efficiency is already priced in.
2. Which statement is true about how the global market affects the U.S.?
A. A bad options trade executed by a foreign subsidiary of a Wall Street bank will
affect layoffs overseas.
B. A Bad derivatives trade executed by a foreign subsidiary of a Wall Street bank will
affect layoffs overseas. ✅
C. American investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
D. Foreign investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
Rationale: The global financial market is interconnected, and a poor derivatives
trade overseas can impact financial institutions globally. This may lead to layoffs both
,domestically and abroad. U.S. investors are affected indirectly through global
exposure, showing the systemic risk of global markets.
3. What are secondary markets?
A. Markets where securities are traded subsequent to the initial offering. ✅
B. Markets where securities are issued for the first time.
C. Markets where securities are issued through a competitive sale.
D. Markets where securities are issued through a negotiated sale.
Rationale: Secondary markets involve the trading of existing securities after the
initial issuance (IPO). These markets provide liquidity to investors and allow price
discovery. In contrast, primary markets are where securities are issued for the first
time.
4. A special interest group in the U.S. has been lobbying for protectionism
through tariffs and trade restrictions to save jobs. What is the most likely
result if successful?
A. Employees and shareholders of the domestic industry that produce the protective
goods will be hurt and the nation will benefit.
B. The overall economy will benefit from trade restrictions and tariffs.
C. Removing the trade restrictions and tariffs will result in a net economic loss to the
overall U.S. economy.
D. Employees and shareholders of the domestic industry that produce the protected
goods will benefit and the nation will be hurt. ✅
Rationale: Protectionist measures may benefit a specific domestic industry in the
short term but often hurt the overall economy by raising prices, reducing
competition, and decreasing efficiency. Economic theory and empirical evidence show
that tariffs generally benefit a small sector at the cost of the wider population.
, 5. What do the content and structure of a balance sheet report?
A. Revenues and expenses over a period of time.
B. Assets, liabilities, and equity at a point in time. ✅
C. Cash inflows and outflows from operations.
D. Market trends and stock valuation.
Rationale: The balance sheet provides a snapshot of a company’s financial
position at a specific point in time, including assets, liabilities, and equity. It
differs from the income statement (flows) or cash flow statement (inflows/outflows).
6. What is the basis used to compute a company's income tax expense?
A. Pretax accounting income ✅
B. Taxable income
C. Net operating income
D. Taxes payable
Rationale: Income tax expense is calculated based on pretax accounting
income, which is the income before taxes are deducted. Taxable income may differ
due to temporary and permanent differences from accounting rules, but for reporting
purposes, the expense is linked to accounting income.
7. What is the firm’s cash flow from financing, using the data below?
Data:
Net Income = $1,000
Depreciation Expense = $300
Change in Operating Assets = $600
Change in Net PP&E = $5,000
Change in Long-term Liabilities = $1,000
Dividends Paid = $200
Cash flow from financing = Change in Long-term Liabilities – Dividends Paid
