WGU C214 OBJECTIVE ASSESSMENT 2026
COMPLETE EXAM REVIEW
◉ Investments. Answer: various types of financial instruments
(stocks, bonds, etc)
◉ Banking or Financial Institutions. Answer: make money by paying
depositors a smaller interest rate than the interest rate charged to
borrowers
◉ Treasury Securities. Answer: generally bonds that are issued by
the US government
◉ Corporate Bonds. Answer: firms borrowing from the public
◉ Stocks. Answer: a share of ownership in a company
◉ Primary financial markets. Answer: markets where securities are
first issued
◉ Syndicate. Answer: a group that is temporarily formed to handle a
bond or stock issue: generally large investment bank or institutional
investors
,◉ Underwriter. Answer: responsible for determining the value of the
security; may purchase all the securities & then resale to investors
◉ Competitive sale. Answer: underwriters submit bids offering
highest price/lowest interest rate; underwriter resales a slightly
higher price
◉ Negotiated sale. Answer: underwriters submit bids, go thru
interview to be selected
◉ Secondary financial markets. Answer: where securities are traded
after the initial offering (stock market)
◉ Auction market. Answer: has a physical location & prices are
determined by the highest price an investor is willing to pay (New
York Stock Exchange)
◉ Dealer market. Answer: no physical location- securities are
bought & sold thru a network of dealers that trade for themselves;
multi dealers per stock (NASDAQ)
◉ Role of financial markets. Answer: they reduce the cost of
borrowing from the public or selling ownership to the public
,◉ Role of Specialist (NYSE) or Dealers. Answer: provide liquidity for
a fair & orderly market; may increase the spread to do so (charge a
lower price to seller and a higher price to buyer)
◉ Financial market liquidity. Answer: the ease of trading in the
market (high frquency traders)
◉ Market orders. Answer: time sensitive; sales at current bid
price/buys at current asking price when order is placed-
immediately
◉ Limited orders. Answer: price sensitive; sell occurs when price of
stock matches order price
◉ Role of price. Answer: convet information to consumers; affect
incentives &affect the distribution of income
◉ Dollar Returns. Answer: Pt - Pt-1 + CFt (Pt= sold price, Pt-
1=bought price, CFt=cash flow-coupons for bonds/dividians for
stocks)
◉ Percentage Returns. Answer: Pt - Pt-1/Pt-1 + CFt/Pt-1 x 100 (1.2)
(figure for dollar return and divide into bought price)
, ◉ Goal of company/firm. Answer: to maximize shareholder value or
maximize profit
◉ Agency costs. Answer: costs that are incurred when management
doesn't act in the best interests of shareholders
◉ Profit maximizarion. Answer: the potential effect of focusing soley
on profits
◉ Accounting. Answer: is backward-looking and risk free
◉ Finance. Answer: is forward-looking and involes massive
uncertainty
◉ Income Statement. Answer: show results of operation over time;
revenues - expenses = net income
◉ Balance Sheet. Answer: a "snap shot" of a firm's assests &
financing at a paticular point in time; Assets= Liabilities + Owner's
Equity
◉ Statement of Cash Flows. Answer: tracks all cash in and out of the
firm
COMPLETE EXAM REVIEW
◉ Investments. Answer: various types of financial instruments
(stocks, bonds, etc)
◉ Banking or Financial Institutions. Answer: make money by paying
depositors a smaller interest rate than the interest rate charged to
borrowers
◉ Treasury Securities. Answer: generally bonds that are issued by
the US government
◉ Corporate Bonds. Answer: firms borrowing from the public
◉ Stocks. Answer: a share of ownership in a company
◉ Primary financial markets. Answer: markets where securities are
first issued
◉ Syndicate. Answer: a group that is temporarily formed to handle a
bond or stock issue: generally large investment bank or institutional
investors
,◉ Underwriter. Answer: responsible for determining the value of the
security; may purchase all the securities & then resale to investors
◉ Competitive sale. Answer: underwriters submit bids offering
highest price/lowest interest rate; underwriter resales a slightly
higher price
◉ Negotiated sale. Answer: underwriters submit bids, go thru
interview to be selected
◉ Secondary financial markets. Answer: where securities are traded
after the initial offering (stock market)
◉ Auction market. Answer: has a physical location & prices are
determined by the highest price an investor is willing to pay (New
York Stock Exchange)
◉ Dealer market. Answer: no physical location- securities are
bought & sold thru a network of dealers that trade for themselves;
multi dealers per stock (NASDAQ)
◉ Role of financial markets. Answer: they reduce the cost of
borrowing from the public or selling ownership to the public
,◉ Role of Specialist (NYSE) or Dealers. Answer: provide liquidity for
a fair & orderly market; may increase the spread to do so (charge a
lower price to seller and a higher price to buyer)
◉ Financial market liquidity. Answer: the ease of trading in the
market (high frquency traders)
◉ Market orders. Answer: time sensitive; sales at current bid
price/buys at current asking price when order is placed-
immediately
◉ Limited orders. Answer: price sensitive; sell occurs when price of
stock matches order price
◉ Role of price. Answer: convet information to consumers; affect
incentives &affect the distribution of income
◉ Dollar Returns. Answer: Pt - Pt-1 + CFt (Pt= sold price, Pt-
1=bought price, CFt=cash flow-coupons for bonds/dividians for
stocks)
◉ Percentage Returns. Answer: Pt - Pt-1/Pt-1 + CFt/Pt-1 x 100 (1.2)
(figure for dollar return and divide into bought price)
, ◉ Goal of company/firm. Answer: to maximize shareholder value or
maximize profit
◉ Agency costs. Answer: costs that are incurred when management
doesn't act in the best interests of shareholders
◉ Profit maximizarion. Answer: the potential effect of focusing soley
on profits
◉ Accounting. Answer: is backward-looking and risk free
◉ Finance. Answer: is forward-looking and involes massive
uncertainty
◉ Income Statement. Answer: show results of operation over time;
revenues - expenses = net income
◉ Balance Sheet. Answer: a "snap shot" of a firm's assests &
financing at a paticular point in time; Assets= Liabilities + Owner's
Equity
◉ Statement of Cash Flows. Answer: tracks all cash in and out of the
firm
