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WGU C214 OA Financial Management Exam
Questions and Answers Latest (2024-2025)
(Verified Answers)
1) How does a good credit rating from S&P and Moody's affect the firm? -
ANSWER>>Lowers the cost of financing. a credit downgrade increases the cost
of financing
2) If a firm's risk-return line is above the market risk-return line, what happens? -
ANSWER>>The firm's stock price will increase to reduce it expected return to the
market level
3) Which will be larger: accrual taxes payable or accounting income tax expense -
ANSWER>>Accounting tax expense will be higher; actual taxes based on IRS
rules will be lower
Which financial ratios measure "efficiency"? - ANSWER>>Asset turnover and
4)
Fixed Asset turnover
Which ratio is the best measure of a firm's ability to pay bills? - ANSWER>>Quick
5)
Ratio
6) Which decision requires using subjective estimates? - ANSWER>>Economic life
of a new asset
What is the yield to maturity on a bond? - ANSWER>>The return earned from the
7) purchase date to
maturity
If a firm buys a 30-day CD, where is it carried on the balance sheet? -
8)
ANSWER>>Cash and ST in current assets
How does a "prudent investor" select investments? - ANSWER>>Seeks the
9)
highest return for "reasonable" amount of risk
10) What is the difference between WACC and CAPM's required return? -
ANSWER>>CAPM includes only equity required return; WACC includes debt and
equity
WGU C214 OA Financial Management Exam Questions and Answers Latest (2024-2025) (Verified Answers)
, WGU
What do points on the Efficient Frontier measure? - ANSWER>>The
maximum
11)
return for a given level of risk; maximum Return-to-risk
ratio
What is Beta? - ANSWER>>Measure of volatility of a stock's risk relative to
12) the
market
Why are accurate forecasts important? - ANSWER>>Plan for resources
13) to
support sales
Which leverage measure shows the impact of EBIT changes on pre-tax
14) profit
(EBT)? - ANSWER>>Financial leverage
Which ratios are used in working capital management? - ANSWER>>Cash
15) ratio,
Current ratio - ratios containing current assets and/or current liabilities
Which ratio is used for valuing a private company? - ANSWER>>Price-
16) to-
earnings
What (PE)
are ratio
the 4 costs associated with holding inventory? -
ANSWER>>Product,
17)
storage, holding, and
opportunity
What risk is eliminated by a diversified portfolio? - ANSWER>>Idiosyncratic risk
18) -
risk affecting a single firm
What is the "secondary" market? - ANSWER>>Investors trading
19) securities
among themselves after initial issuance of securities
What are impacts of outsourcing? - ANSWER>>Fewer jobs and lower
20) priced
products
What are the impacts of tariffs? - ANSWER>>Protects inefficient firms
21) and
employees; higher product costs for consumers
Which item is transferred from the income statement to the balance sheet?
22) -
ANSWER>>Depreciation expense
If two companies use different inventory valuation methods, what is this called?
23) -
ANSWER>>An
What securities"accounting
are exemptdifference"
from federal income taxation?
-
24)
ANSWER>>Municipal
bonds
Why would a firm prefer to issue debt rather than stock? - ANSWER>>Deb has
25) a
lower required return; debt interest is tax deductible; avoids dilution of ownership
WGU C214 OA Financial Management Exam Questions and Answers Latest (2024-2025) (Verified Answers)
WGU C214 OA Financial Management Exam
Questions and Answers Latest (2024-2025)
(Verified Answers)
1) How does a good credit rating from S&P and Moody's affect the firm? -
ANSWER>>Lowers the cost of financing. a credit downgrade increases the cost
of financing
2) If a firm's risk-return line is above the market risk-return line, what happens? -
ANSWER>>The firm's stock price will increase to reduce it expected return to the
market level
3) Which will be larger: accrual taxes payable or accounting income tax expense -
ANSWER>>Accounting tax expense will be higher; actual taxes based on IRS
rules will be lower
Which financial ratios measure "efficiency"? - ANSWER>>Asset turnover and
4)
Fixed Asset turnover
Which ratio is the best measure of a firm's ability to pay bills? - ANSWER>>Quick
5)
Ratio
6) Which decision requires using subjective estimates? - ANSWER>>Economic life
of a new asset
What is the yield to maturity on a bond? - ANSWER>>The return earned from the
7) purchase date to
maturity
If a firm buys a 30-day CD, where is it carried on the balance sheet? -
8)
ANSWER>>Cash and ST in current assets
How does a "prudent investor" select investments? - ANSWER>>Seeks the
9)
highest return for "reasonable" amount of risk
10) What is the difference between WACC and CAPM's required return? -
ANSWER>>CAPM includes only equity required return; WACC includes debt and
equity
WGU C214 OA Financial Management Exam Questions and Answers Latest (2024-2025) (Verified Answers)
, WGU
What do points on the Efficient Frontier measure? - ANSWER>>The
maximum
11)
return for a given level of risk; maximum Return-to-risk
ratio
What is Beta? - ANSWER>>Measure of volatility of a stock's risk relative to
12) the
market
Why are accurate forecasts important? - ANSWER>>Plan for resources
13) to
support sales
Which leverage measure shows the impact of EBIT changes on pre-tax
14) profit
(EBT)? - ANSWER>>Financial leverage
Which ratios are used in working capital management? - ANSWER>>Cash
15) ratio,
Current ratio - ratios containing current assets and/or current liabilities
Which ratio is used for valuing a private company? - ANSWER>>Price-
16) to-
earnings
What (PE)
are ratio
the 4 costs associated with holding inventory? -
ANSWER>>Product,
17)
storage, holding, and
opportunity
What risk is eliminated by a diversified portfolio? - ANSWER>>Idiosyncratic risk
18) -
risk affecting a single firm
What is the "secondary" market? - ANSWER>>Investors trading
19) securities
among themselves after initial issuance of securities
What are impacts of outsourcing? - ANSWER>>Fewer jobs and lower
20) priced
products
What are the impacts of tariffs? - ANSWER>>Protects inefficient firms
21) and
employees; higher product costs for consumers
Which item is transferred from the income statement to the balance sheet?
22) -
ANSWER>>Depreciation expense
If two companies use different inventory valuation methods, what is this called?
23) -
ANSWER>>An
What securities"accounting
are exemptdifference"
from federal income taxation?
-
24)
ANSWER>>Municipal
bonds
Why would a firm prefer to issue debt rather than stock? - ANSWER>>Deb has
25) a
lower required return; debt interest is tax deductible; avoids dilution of ownership
WGU C214 OA Financial Management Exam Questions and Answers Latest (2024-2025) (Verified Answers)
