WGU D775 BUSINESS FINANCE OA
COMPREHENSIVE STUDY GUIDE 2026 FULL
QUESTIONS AND SOLUTIONS GRADED A+
◍ Cost of Debt (Cd).
Answer: Interest rate on loans or bonds before taxes.
◍ IRR.
Answer: Internal Rate of Return — Discount rate making NPV = 0; accept if
IRR > cost of capital.
◍ WACC.
Answer: (We × Ce) + (Wd × Cd_after_tax) — Weighted average cost of
capital.
◍ Primary Market.
Answer: Where new securities are issued; money goes directly to issuer
(e.g., IPO).
◍ FV.
Answer: Future Value
◍ Shareholders.
Answer: Owners of a corporation who expect transparency and
accountability.
◍ Annuity PV.
Answer: Annuity PV = Pmt × PVIFA(r, n) — Present value of equal
periodic payments.
◍ Municipal Bonds.
Answer: Issued by local governments; often tax-free interest income.
◍ n.
, Answer: Number of periods
◍ Dealer Market.
Answer: Dealers set prices and profit from bid-ask spreads (NASDAQ).
◍ After-Tax Cost of Debt.
Answer: Cd × (1 − Tax Rate) — Accounts for tax-deductible interest.
◍ Debt Capital.
Answer: Borrowed funds with repayment plus interest; interest may be
tax-deductible.
◍ Auction Market.
Answer: Buyers/sellers meet at a single price; matching via bids (NYSE).
◍ ETFs.
Answer: Exchange-Traded Funds — trade like stocks; often track an index.
◍ Debt-to-Equity.
Answer: Total Liabilities ÷ Total Equity — Debt level vs owner's equity.
◍ Annuity FV.
Answer: Annuity FV = Pmt × FVIFA(r, n) — Future value of equal periodic
payments.
◍ NPV Usage.
Answer: Best for absolute value assessment.
◍ Options.
Answer: Derivatives giving the right (not obligation) to buy/sell an asset at a
set price before expiration.
◍ Yield Curve.
Answer: Graph of interest rate vs maturity; normal indicates growth,
inverted can signal recession.
◍ Pmt.
Answer: Payment per period
◍ Corporate Bonds.
COMPREHENSIVE STUDY GUIDE 2026 FULL
QUESTIONS AND SOLUTIONS GRADED A+
◍ Cost of Debt (Cd).
Answer: Interest rate on loans or bonds before taxes.
◍ IRR.
Answer: Internal Rate of Return — Discount rate making NPV = 0; accept if
IRR > cost of capital.
◍ WACC.
Answer: (We × Ce) + (Wd × Cd_after_tax) — Weighted average cost of
capital.
◍ Primary Market.
Answer: Where new securities are issued; money goes directly to issuer
(e.g., IPO).
◍ FV.
Answer: Future Value
◍ Shareholders.
Answer: Owners of a corporation who expect transparency and
accountability.
◍ Annuity PV.
Answer: Annuity PV = Pmt × PVIFA(r, n) — Present value of equal
periodic payments.
◍ Municipal Bonds.
Answer: Issued by local governments; often tax-free interest income.
◍ n.
, Answer: Number of periods
◍ Dealer Market.
Answer: Dealers set prices and profit from bid-ask spreads (NASDAQ).
◍ After-Tax Cost of Debt.
Answer: Cd × (1 − Tax Rate) — Accounts for tax-deductible interest.
◍ Debt Capital.
Answer: Borrowed funds with repayment plus interest; interest may be
tax-deductible.
◍ Auction Market.
Answer: Buyers/sellers meet at a single price; matching via bids (NYSE).
◍ ETFs.
Answer: Exchange-Traded Funds — trade like stocks; often track an index.
◍ Debt-to-Equity.
Answer: Total Liabilities ÷ Total Equity — Debt level vs owner's equity.
◍ Annuity FV.
Answer: Annuity FV = Pmt × FVIFA(r, n) — Future value of equal periodic
payments.
◍ NPV Usage.
Answer: Best for absolute value assessment.
◍ Options.
Answer: Derivatives giving the right (not obligation) to buy/sell an asset at a
set price before expiration.
◍ Yield Curve.
Answer: Graph of interest rate vs maturity; normal indicates growth,
inverted can signal recession.
◍ Pmt.
Answer: Payment per period
◍ Corporate Bonds.
