WGU: Business Finance-D775
2026/2027 With Questions And
Correct Answers
Use of financial ratios in business operations - CORRECT ANSWER✔✨-To evaluate and improve
business performance
Primary objective of business finance - CORRECT ANSWER✔✨-Maximizing shareholder value
Corporate bonds - CORRECT ANSWER✔✨-Financing operations and expansions
Financial derivatives - CORRECT ANSWER✔✨-Performance of underlying assets, indexes, or rates
Future as a type of financial derivative - CORRECT ANSWER✔✨-A standardized contract to buy or sell
an asset at a specified future date and price
Funds achieve diversification - CORRECT ANSWER✔✨-By pooling money from multiple investors to
invest in a variety of assets
Speculative bonds, or junk bonds - CORRECT ANSWER✔✨-Higher risk and higher returns
Advantage of investing in exchange-traded funds (ETFs) - CORRECT ANSWER✔✨-They can be bought
and sold throughout the trading day like stocks.
Example of a dealer market - CORRECT ANSWER✔✨-National Association of Securities Dealers
Automated Quotations (NASDAQ)
,Example of an auction market - CORRECT ANSWER✔✨-New York Stock Exchange
Commodity Futures Trading Commission (CFTC) - CORRECT ANSWER✔✨-Overseeing futures and
options markets
Role of insurance companies in the financial system - CORRECT ANSWER✔✨-Underwriting policies to
protect against risks
How insurance companies generate income - CORRECT ANSWER✔✨-By collecting premiums and
investing these funds
Key characteristic of private equity raising - CORRECT ANSWER✔✨-It involves securing funds from
private investors like venture capitalists.
Legal compliance in finance - CORRECT ANSWER✔✨-It ensures adherence to laws and regulations.
Corporate social responsibility (CSR) - CORRECT ANSWER✔✨-The obligation to contribute positively
to society
Guiding principle for business professionals in ethical dilemmas - CORRECT ANSWER✔✨-Upholding
honesty, fairness, and accountability
Significance of financial ratios in assessing risk - CORRECT ANSWER✔✨-They identify potential
economic hazards within the company.
Use of financial ratios for decision-making by investors - CORRECT ANSWER✔✨-To assess the
potential return on investment
Key purpose of financial ratios in investment analysis - CORRECT ANSWER✔✨-To evaluate the
company's profitability and growth prospects
, Market ratios - CORRECT ANSWER✔✨-Evaluate stock performance
Why companies use market ratios - CORRECT ANSWER✔✨-To analyze stock value
Low quick ratio - CORRECT ANSWER✔✨-Indicates a company's liquidity issues
Reliance on inventory - CORRECT ANSWER✔✨-A measure of how much a company depends on its
inventory for its operations.
Strong cash position - CORRECT ANSWER✔✨-Indicates that a company has sufficient cash to meet its
short-term obligations.
High financial stability - CORRECT ANSWER✔✨-A state where a company has a solid financial
foundation, minimizing risks.
Excess cash reserves - CORRECT ANSWER✔✨-Cash that exceeds the amount needed for immediate
operational needs.
High cash ratio - CORRECT ANSWER✔✨-Implies that a company has a strong ability to cover its short-
term debts with cash.
Times interest earned (TIE) ratio - CORRECT ANSWER✔✨-Focuses on earnings covering debt
payments.
Total revenue generated - CORRECT ANSWER✔✨-The total income produced by a company from its
business activities.
Asset turnover efficiency - CORRECT ANSWER✔✨-Measures how effectively a company uses its assets
to generate sales.
2026/2027 With Questions And
Correct Answers
Use of financial ratios in business operations - CORRECT ANSWER✔✨-To evaluate and improve
business performance
Primary objective of business finance - CORRECT ANSWER✔✨-Maximizing shareholder value
Corporate bonds - CORRECT ANSWER✔✨-Financing operations and expansions
Financial derivatives - CORRECT ANSWER✔✨-Performance of underlying assets, indexes, or rates
Future as a type of financial derivative - CORRECT ANSWER✔✨-A standardized contract to buy or sell
an asset at a specified future date and price
Funds achieve diversification - CORRECT ANSWER✔✨-By pooling money from multiple investors to
invest in a variety of assets
Speculative bonds, or junk bonds - CORRECT ANSWER✔✨-Higher risk and higher returns
Advantage of investing in exchange-traded funds (ETFs) - CORRECT ANSWER✔✨-They can be bought
and sold throughout the trading day like stocks.
Example of a dealer market - CORRECT ANSWER✔✨-National Association of Securities Dealers
Automated Quotations (NASDAQ)
,Example of an auction market - CORRECT ANSWER✔✨-New York Stock Exchange
Commodity Futures Trading Commission (CFTC) - CORRECT ANSWER✔✨-Overseeing futures and
options markets
Role of insurance companies in the financial system - CORRECT ANSWER✔✨-Underwriting policies to
protect against risks
How insurance companies generate income - CORRECT ANSWER✔✨-By collecting premiums and
investing these funds
Key characteristic of private equity raising - CORRECT ANSWER✔✨-It involves securing funds from
private investors like venture capitalists.
Legal compliance in finance - CORRECT ANSWER✔✨-It ensures adherence to laws and regulations.
Corporate social responsibility (CSR) - CORRECT ANSWER✔✨-The obligation to contribute positively
to society
Guiding principle for business professionals in ethical dilemmas - CORRECT ANSWER✔✨-Upholding
honesty, fairness, and accountability
Significance of financial ratios in assessing risk - CORRECT ANSWER✔✨-They identify potential
economic hazards within the company.
Use of financial ratios for decision-making by investors - CORRECT ANSWER✔✨-To assess the
potential return on investment
Key purpose of financial ratios in investment analysis - CORRECT ANSWER✔✨-To evaluate the
company's profitability and growth prospects
, Market ratios - CORRECT ANSWER✔✨-Evaluate stock performance
Why companies use market ratios - CORRECT ANSWER✔✨-To analyze stock value
Low quick ratio - CORRECT ANSWER✔✨-Indicates a company's liquidity issues
Reliance on inventory - CORRECT ANSWER✔✨-A measure of how much a company depends on its
inventory for its operations.
Strong cash position - CORRECT ANSWER✔✨-Indicates that a company has sufficient cash to meet its
short-term obligations.
High financial stability - CORRECT ANSWER✔✨-A state where a company has a solid financial
foundation, minimizing risks.
Excess cash reserves - CORRECT ANSWER✔✨-Cash that exceeds the amount needed for immediate
operational needs.
High cash ratio - CORRECT ANSWER✔✨-Implies that a company has a strong ability to cover its short-
term debts with cash.
Times interest earned (TIE) ratio - CORRECT ANSWER✔✨-Focuses on earnings covering debt
payments.
Total revenue generated - CORRECT ANSWER✔✨-The total income produced by a company from its
business activities.
Asset turnover efficiency - CORRECT ANSWER✔✨-Measures how effectively a company uses its assets
to generate sales.
