WGU D076 CORRECT FINAL EXAMS QUESTIONS
AND ANSWERS SURE A+
✔✔Dividend Discount Model - ✔✔A model used to evaluate common stock that
calculates the value of a share of common stock today by taking the present value of
future dividend cash flows.
✔✔Dividends in Arrears - ✔✔A feature of preferred stock specifying that if a company
ignores preferred stock dividends, it cannot pay anything to its common stockholders.
✔✔DuPont Framework - ✔✔An expanded formula of the return of equity, net margin
times total asset turnover times leverage multiplier, which represent the components of
profitability, activity (efficiency), and financing.
✔✔Efficient market - ✔✔A market in which prices fully reflect all the available
information about a specific security.
✔✔Estates - ✔✔Everything that a person owns or controls, especially at death.
✔✔Ethical Dilemma - ✔✔An issue in the process of deciding between multiple options
where no option is completely acceptable from an ethical standpoint.
✔✔Ethics - ✔✔Following accepted standards of moral conduct.
✔✔Expected Return - ✔✔A hypothesized estimate of future prices or returns under
different scenarios based on expectational data.
✔✔External Financing Needed (EFN) - ✔✔Another name for the discretionary financing
needed or additional funds needed. It represents the additional financing needed given
a firm's expectations for future growth.
, ✔✔Face Value - ✔✔The sum of money that a corporation promises to pay at the
expiration of a bond; also called par value.
✔✔Finance - ✔✔The study of managing and allocating funds at the personal or
business level.
✔✔Financial Institutions - ✔✔An area of finance that includes firms or organizations that
exist to accept a wide variety of deposits, to offer investment products to individuals and
businesses, to provide loans, or to broker financial transactions.
✔✔Financial Managers - ✔✔A person who makes strategic financial decisions in a
corporation.
✔✔Financial Policy Implementation - ✔✔Incorporating new finance ideas within a firm.
✔✔Financial Risk - ✔✔Increased volatility in earnings as a result of using debt.
✔✔Firm-specific Risk - ✔✔Risk that results from factors at a particular firm and can be
reduced through diversification; also called nonsystematic risk or idiosyncratic risk.
✔✔Fisher Effect - ✔✔An economic theory developed by Irving Fisher holding that the
real interest rate is equivalent to the nominal interest rate minus the expected inflation
rate.
✔✔Fixed Asset Turnover (FAT) - ✔✔An activity ratio found by sales divided by fixed
assets.
✔✔Fixed Expenditures - ✔✔An expense that you do not have direct control over and
that remains constant from period to period
✔✔Fixed-income Securities - ✔✔Another name for bonds; a financial security in which
the borrower pays a fixed interest payment to investors each year.
✔✔Future Value - ✔✔The worth of cash flows in terms of the dollar amount in the
relative future.
✔✔Gordon Growth Model - ✔✔A formula used to value common stock based on the
assumptions that dividends are paid every year and grow at constant rate forever.
✔✔Gross Margin - ✔✔A profitability ratio found by gross profit divided by sales.
✔✔Harvest - ✔✔Generating cash or stock from the sales or IPO of companies in the
portfolio of investments.
AND ANSWERS SURE A+
✔✔Dividend Discount Model - ✔✔A model used to evaluate common stock that
calculates the value of a share of common stock today by taking the present value of
future dividend cash flows.
✔✔Dividends in Arrears - ✔✔A feature of preferred stock specifying that if a company
ignores preferred stock dividends, it cannot pay anything to its common stockholders.
✔✔DuPont Framework - ✔✔An expanded formula of the return of equity, net margin
times total asset turnover times leverage multiplier, which represent the components of
profitability, activity (efficiency), and financing.
✔✔Efficient market - ✔✔A market in which prices fully reflect all the available
information about a specific security.
✔✔Estates - ✔✔Everything that a person owns or controls, especially at death.
✔✔Ethical Dilemma - ✔✔An issue in the process of deciding between multiple options
where no option is completely acceptable from an ethical standpoint.
✔✔Ethics - ✔✔Following accepted standards of moral conduct.
✔✔Expected Return - ✔✔A hypothesized estimate of future prices or returns under
different scenarios based on expectational data.
✔✔External Financing Needed (EFN) - ✔✔Another name for the discretionary financing
needed or additional funds needed. It represents the additional financing needed given
a firm's expectations for future growth.
, ✔✔Face Value - ✔✔The sum of money that a corporation promises to pay at the
expiration of a bond; also called par value.
✔✔Finance - ✔✔The study of managing and allocating funds at the personal or
business level.
✔✔Financial Institutions - ✔✔An area of finance that includes firms or organizations that
exist to accept a wide variety of deposits, to offer investment products to individuals and
businesses, to provide loans, or to broker financial transactions.
✔✔Financial Managers - ✔✔A person who makes strategic financial decisions in a
corporation.
✔✔Financial Policy Implementation - ✔✔Incorporating new finance ideas within a firm.
✔✔Financial Risk - ✔✔Increased volatility in earnings as a result of using debt.
✔✔Firm-specific Risk - ✔✔Risk that results from factors at a particular firm and can be
reduced through diversification; also called nonsystematic risk or idiosyncratic risk.
✔✔Fisher Effect - ✔✔An economic theory developed by Irving Fisher holding that the
real interest rate is equivalent to the nominal interest rate minus the expected inflation
rate.
✔✔Fixed Asset Turnover (FAT) - ✔✔An activity ratio found by sales divided by fixed
assets.
✔✔Fixed Expenditures - ✔✔An expense that you do not have direct control over and
that remains constant from period to period
✔✔Fixed-income Securities - ✔✔Another name for bonds; a financial security in which
the borrower pays a fixed interest payment to investors each year.
✔✔Future Value - ✔✔The worth of cash flows in terms of the dollar amount in the
relative future.
✔✔Gordon Growth Model - ✔✔A formula used to value common stock based on the
assumptions that dividends are paid every year and grow at constant rate forever.
✔✔Gross Margin - ✔✔A profitability ratio found by gross profit divided by sales.
✔✔Harvest - ✔✔Generating cash or stock from the sales or IPO of companies in the
portfolio of investments.
