WGU Finance Pre Assessment Test With Correct Answers
Why care cAmerican cregulators cfocused con cinternational cinvesting cin ca cglobal cmarketplace? c- cCORRECT cANS✔✔Because
cinternational cinvesting cin ca cglobal cmarketplace cis cthe cconcern cof cAmerican cinvestors
What care cthe clikeliest coutcomes cif ca ccompany coutsources cthe cmanufacturing cof cits cproducts cto ca cforeign ccompany? c-
cCORRECT cANS✔✔1. cConsumer cprices cwill cdecrease
2. cDomestic cemployment cwill cdecrease
How ccan ca cprivate cfirm cappropriately cmaximize cshareholder cvalue? c- cCORRECT cANS✔✔By cmaking cdecisions cthat ckeep
cthe ccontrol cof cthe cbusiness cwith cthe cowners
What cis cone cof cthe ctwo cbasic ctypes cof cfinancial cinstruments? c- cCORRECT cANS✔✔Bonds
A ccompany creported can cincrease cin cAR cof c$5000 cduring cthe crecent cperiod. cHalf cof cthis camount cis cexpected cto cbe
ccollected cnext cperiod.
How cwill cthis cchange cin cAE caffect cthe ccash cflows cfrom cthe coperating cactivities csection? c- cCORRECT cANS✔✔The cchange
cwill cdecrease ccash cflows cfrom coperations cby c$5,000
Selected cdata cfor c20x2 cfor cABD cInc.
Net cIncome c$1000
Depreciation cExp c$300
Change cin cOp cAssets c$600
Change cin cNet cPPE c$5000
Change cin cLT cLiabilities c$1000
Dividends cPaid c$200
What cis cthe cfirm's ccash cflow cfrom cinvestments, cusing cthe cdata cabove cand cassuming cno casset cdisposals? c- cCORRECT
cANS✔✔$5300 coutflow,
Change cin cNet cPPE cand cDepreciation cExpense
What cdo ccash cflows cfrom cinvesting cactivities cgenerally crelate cto? c- cCORRECT cANS✔✔A cfirm's cpurchase cand csale cof clong-
term cassets
Which ctransaction cis creflected cin ccash cflow cfrom coperating cactivities? c- cCORRECT cANS✔✔Cash csales cto ccustomers
What cdoes cfree ccash cflow crepresent? c- cCORRECT cANS✔✔Cash cavailable cfor cdistribution cafter cfunding crequired
creinvestment
What cdo cthe ccontent cand cstructure cof ca cbalance csheet creport? c- cCORRECT cANS✔✔The cassets, cliabilities, cand cequity cat ca
cpoint cin ctime
Which cstatement caccurately cexplains cthe crecognition cof crevenues cand cexpenses cunder caccounting cincome cand cincome cfor
ctax cpurposes? c- cCORRECT cANS✔✔Revenues cand cexpenses cmay cbe crecognized cin cone cperiod cfor caccounting cincome
cpurposes cand cin ca cdifferent cperiod cfor cincome ctax cpurposes.
What cis cthe cbasic cequation cof ca cbalance csheet? c- cCORRECT cANS✔✔Assets c= cLiabilities c+ cEquity
An canalyst cis ccomparing cthe cratios cof ctwo cfirms cand cneeds cto caddress ctiming cdifferences.
What cis can cexample cof ca ctiming cdifference cbetween cthese ctwo cfirms? c- cCORRECT cANS✔✔The cfirms chave cdifferent cfiscal
cyears
A ccompany's cyear cend cbalance csheet cfor c2013 cshows cthe cfollowing:
AR c$900
Inv c$1200
Fixed cAssets c$1000
AP c$1300
Sales c$4000
Salaries cExp c$275
, What cis cthe cFixed cAsset cTurnover cratio? c- cCORRECT cANS✔✔4.0
Fixed cAsset cTurnover c= cSales c/ cFixed cAssets
A cfirm chas ca cROE cof c.27, cand cthe cindustry caverage cis c.24. cWhich cconclusion cshould can canalyst cdraw cwhen ccomparing
cthis cfirm cto cthe cindustry? c- cCORRECT cANS✔✔The cfirm cis cgenerating chigher creturns cto cowners cthan cthe cindustry
What cmust chave ctaken cplace cfor ca cfirm cto crecognize crevenue, cin corder cfor cthe cfirm cto ccomply cwith caccrual caccounting? c-
cCORRECT cANS✔✔The cproduct cmust chave cbeen cdelivered.
A cteacher cwon c$100k cand cinvests cthis cmoney cfor c5 cyears cat can cinterest crate cof c4%, ccompounded cannually.
How cmuch cwill cthis cteacher chave cin cprincipal cand cinterest cat cthe cend cof cthe cyear? c- cCORRECT cANS✔✔$121,665
An caccountant cis c40 cyears cold cand chas canticipated cretirement cage cof c70 cyears cold. cHe cplans cto csave c$6k ca cyear cat cthe
cend cof cthe cnext c30 cyears cto cfund chis cretirement.
How cmuch cwill cthis caccountant chave cupon cretirement, cif cthey care cable cto cearn c4% cannually? c- cCORRECT
cANS✔✔$336,510
An cinvestor cdeposits c$2k cper cyear c(beginning ctoday) cfor c10 cyears cin ca c4% cinterest-bearing caccount. cThe clast ccash cflow cis
creceived cone cyear cprior cto cthe cend cof cthe ctenth cyear.
What cis cthe cinvestor's cfuture cbalance cafter c10 cyears? c- cCORRECT cANS✔✔$24,973
What cis cthe cpar cvalue c(face cvalue) cof ca cbond? c- cCORRECT cANS✔✔The csum cof cmoney cthat cthe ccorporation cpromises cto
cpay cupon cexpiration cof cthe cbond?
The cmarket crate cof creturn cis c9%. cThe cFV cof ca cbond cis c$1k, cthe ccoupon crate cis c9% cwith cannual ccompounding, cand cthe
cbond cmatures cin c10 cyears. c
What cis cthe cvalue cof cthis cbond? c- cCORRECT cANS✔✔$1000
Which cstatement cis ctrue cabout cfluctuations cin cbond cprices? c- cCORRECT cANS✔✔When cmarket cinterest crates cfluctuate, cthe
cbond ccoupon crate cis cunchanged.
A ccompany cissues cbonds cat ca cmarket cprice cof c$925. cThe cFV cis c$1000. cThe cbonds cmature cin c10 cyears, cand cthe ccoupon
crate cis c6% ccompounded csemiannually.
What cis cthe cYTM con cthis ccompany's cbonds? c- cCORRECT cANS✔✔7.06%
Because cwe csolve cof cYTM, cand cits csemi cannual, cmultiple cyour cfirst canswer cby c2
Which csecurities care cissued cby clocal cgovernments cand care cusually ctax cexempt cat cthe cfederal clevel? c- cCORRECT
cANS✔✔Municipal cbonds
A cbond cpays c$27.5 csemiannually, cmatures cin c8 cyears, cand cis ccurrently cprices cat c$1090.
What cis cthe cYTM cfor cthis cbond? c- cCORRECT cANS✔✔4.28%
A cbond cmatures cin c30 cmonths cis csold cat ca cpremium. cWhat cis cthe cYTM? c- cCORRECT cANS✔✔Lower cthan cthe ccoupon crate
Why cdoes ca clong-term cbond cresemble can cinterest conly cloan? c- cCORRECT cANS✔✔None cof cthe cprincipal cis cpaid cuntil cthe
cbond cmatures.
Under cwhich ccircumstance cwill cannual cpercentage cyield c(APY) cbe cgreater cthan cannual cpercentage crate c(APR)? c- cCORRECT
cANS✔✔Any ctime cthe cnumber cof ccompounding cperiods cis cgreater cthan cannual.
A cbroker cis cconsidering cpurchasing ccommon cstock cin ca ccompany cthat chas caverage cbut cconsistent coperating cperformance. c
Which cfactor cshould clead cthis cbroker cto cpurchase cshares cin cthis ccompany? c- cCORRECT cANS✔✔The ccurrent cprice cof cthe
cstock cis c25% cbelow cits cintrinsic cvalue.
A cbroker cis cconsidering cbuying ca cdividend-paying cstock. cThe cdividend cwill cbe cpaid cat cthe cend cof cthe cyear. cThe canalyst
cconsensus cis cthe cstock cwill cbe cworth c$36 cin cone cyear. cThe ccompany cpays c$2.25 cannual cdividend. c(The cex-dividend cdate
cis cnot ca cconsideration; cthe cbroker cwill creceive cthe cfull c$2.25). cThe cbroker cexpects ca c12% crate cof creturn.
What cis cthe chighest cprice cthis cbroker cshould cbe cwilling cto cpay cfor cthis cstock? c- cCORRECT cANS✔✔$34.15
A cperson cbuys cshares cof ca ccompany cat c$45 cand crecently cpaid ca c$2 cannual cdividend cthat cis cexpected cto cgrow cby c10%
cper cyear.
What cis cthe cexpected creturn cper cyear? c- cCORRECT cANS✔✔14.9%
Why care cAmerican cregulators cfocused con cinternational cinvesting cin ca cglobal cmarketplace? c- cCORRECT cANS✔✔Because
cinternational cinvesting cin ca cglobal cmarketplace cis cthe cconcern cof cAmerican cinvestors
What care cthe clikeliest coutcomes cif ca ccompany coutsources cthe cmanufacturing cof cits cproducts cto ca cforeign ccompany? c-
cCORRECT cANS✔✔1. cConsumer cprices cwill cdecrease
2. cDomestic cemployment cwill cdecrease
How ccan ca cprivate cfirm cappropriately cmaximize cshareholder cvalue? c- cCORRECT cANS✔✔By cmaking cdecisions cthat ckeep
cthe ccontrol cof cthe cbusiness cwith cthe cowners
What cis cone cof cthe ctwo cbasic ctypes cof cfinancial cinstruments? c- cCORRECT cANS✔✔Bonds
A ccompany creported can cincrease cin cAR cof c$5000 cduring cthe crecent cperiod. cHalf cof cthis camount cis cexpected cto cbe
ccollected cnext cperiod.
How cwill cthis cchange cin cAE caffect cthe ccash cflows cfrom cthe coperating cactivities csection? c- cCORRECT cANS✔✔The cchange
cwill cdecrease ccash cflows cfrom coperations cby c$5,000
Selected cdata cfor c20x2 cfor cABD cInc.
Net cIncome c$1000
Depreciation cExp c$300
Change cin cOp cAssets c$600
Change cin cNet cPPE c$5000
Change cin cLT cLiabilities c$1000
Dividends cPaid c$200
What cis cthe cfirm's ccash cflow cfrom cinvestments, cusing cthe cdata cabove cand cassuming cno casset cdisposals? c- cCORRECT
cANS✔✔$5300 coutflow,
Change cin cNet cPPE cand cDepreciation cExpense
What cdo ccash cflows cfrom cinvesting cactivities cgenerally crelate cto? c- cCORRECT cANS✔✔A cfirm's cpurchase cand csale cof clong-
term cassets
Which ctransaction cis creflected cin ccash cflow cfrom coperating cactivities? c- cCORRECT cANS✔✔Cash csales cto ccustomers
What cdoes cfree ccash cflow crepresent? c- cCORRECT cANS✔✔Cash cavailable cfor cdistribution cafter cfunding crequired
creinvestment
What cdo cthe ccontent cand cstructure cof ca cbalance csheet creport? c- cCORRECT cANS✔✔The cassets, cliabilities, cand cequity cat ca
cpoint cin ctime
Which cstatement caccurately cexplains cthe crecognition cof crevenues cand cexpenses cunder caccounting cincome cand cincome cfor
ctax cpurposes? c- cCORRECT cANS✔✔Revenues cand cexpenses cmay cbe crecognized cin cone cperiod cfor caccounting cincome
cpurposes cand cin ca cdifferent cperiod cfor cincome ctax cpurposes.
What cis cthe cbasic cequation cof ca cbalance csheet? c- cCORRECT cANS✔✔Assets c= cLiabilities c+ cEquity
An canalyst cis ccomparing cthe cratios cof ctwo cfirms cand cneeds cto caddress ctiming cdifferences.
What cis can cexample cof ca ctiming cdifference cbetween cthese ctwo cfirms? c- cCORRECT cANS✔✔The cfirms chave cdifferent cfiscal
cyears
A ccompany's cyear cend cbalance csheet cfor c2013 cshows cthe cfollowing:
AR c$900
Inv c$1200
Fixed cAssets c$1000
AP c$1300
Sales c$4000
Salaries cExp c$275
, What cis cthe cFixed cAsset cTurnover cratio? c- cCORRECT cANS✔✔4.0
Fixed cAsset cTurnover c= cSales c/ cFixed cAssets
A cfirm chas ca cROE cof c.27, cand cthe cindustry caverage cis c.24. cWhich cconclusion cshould can canalyst cdraw cwhen ccomparing
cthis cfirm cto cthe cindustry? c- cCORRECT cANS✔✔The cfirm cis cgenerating chigher creturns cto cowners cthan cthe cindustry
What cmust chave ctaken cplace cfor ca cfirm cto crecognize crevenue, cin corder cfor cthe cfirm cto ccomply cwith caccrual caccounting? c-
cCORRECT cANS✔✔The cproduct cmust chave cbeen cdelivered.
A cteacher cwon c$100k cand cinvests cthis cmoney cfor c5 cyears cat can cinterest crate cof c4%, ccompounded cannually.
How cmuch cwill cthis cteacher chave cin cprincipal cand cinterest cat cthe cend cof cthe cyear? c- cCORRECT cANS✔✔$121,665
An caccountant cis c40 cyears cold cand chas canticipated cretirement cage cof c70 cyears cold. cHe cplans cto csave c$6k ca cyear cat cthe
cend cof cthe cnext c30 cyears cto cfund chis cretirement.
How cmuch cwill cthis caccountant chave cupon cretirement, cif cthey care cable cto cearn c4% cannually? c- cCORRECT
cANS✔✔$336,510
An cinvestor cdeposits c$2k cper cyear c(beginning ctoday) cfor c10 cyears cin ca c4% cinterest-bearing caccount. cThe clast ccash cflow cis
creceived cone cyear cprior cto cthe cend cof cthe ctenth cyear.
What cis cthe cinvestor's cfuture cbalance cafter c10 cyears? c- cCORRECT cANS✔✔$24,973
What cis cthe cpar cvalue c(face cvalue) cof ca cbond? c- cCORRECT cANS✔✔The csum cof cmoney cthat cthe ccorporation cpromises cto
cpay cupon cexpiration cof cthe cbond?
The cmarket crate cof creturn cis c9%. cThe cFV cof ca cbond cis c$1k, cthe ccoupon crate cis c9% cwith cannual ccompounding, cand cthe
cbond cmatures cin c10 cyears. c
What cis cthe cvalue cof cthis cbond? c- cCORRECT cANS✔✔$1000
Which cstatement cis ctrue cabout cfluctuations cin cbond cprices? c- cCORRECT cANS✔✔When cmarket cinterest crates cfluctuate, cthe
cbond ccoupon crate cis cunchanged.
A ccompany cissues cbonds cat ca cmarket cprice cof c$925. cThe cFV cis c$1000. cThe cbonds cmature cin c10 cyears, cand cthe ccoupon
crate cis c6% ccompounded csemiannually.
What cis cthe cYTM con cthis ccompany's cbonds? c- cCORRECT cANS✔✔7.06%
Because cwe csolve cof cYTM, cand cits csemi cannual, cmultiple cyour cfirst canswer cby c2
Which csecurities care cissued cby clocal cgovernments cand care cusually ctax cexempt cat cthe cfederal clevel? c- cCORRECT
cANS✔✔Municipal cbonds
A cbond cpays c$27.5 csemiannually, cmatures cin c8 cyears, cand cis ccurrently cprices cat c$1090.
What cis cthe cYTM cfor cthis cbond? c- cCORRECT cANS✔✔4.28%
A cbond cmatures cin c30 cmonths cis csold cat ca cpremium. cWhat cis cthe cYTM? c- cCORRECT cANS✔✔Lower cthan cthe ccoupon crate
Why cdoes ca clong-term cbond cresemble can cinterest conly cloan? c- cCORRECT cANS✔✔None cof cthe cprincipal cis cpaid cuntil cthe
cbond cmatures.
Under cwhich ccircumstance cwill cannual cpercentage cyield c(APY) cbe cgreater cthan cannual cpercentage crate c(APR)? c- cCORRECT
cANS✔✔Any ctime cthe cnumber cof ccompounding cperiods cis cgreater cthan cannual.
A cbroker cis cconsidering cpurchasing ccommon cstock cin ca ccompany cthat chas caverage cbut cconsistent coperating cperformance. c
Which cfactor cshould clead cthis cbroker cto cpurchase cshares cin cthis ccompany? c- cCORRECT cANS✔✔The ccurrent cprice cof cthe
cstock cis c25% cbelow cits cintrinsic cvalue.
A cbroker cis cconsidering cbuying ca cdividend-paying cstock. cThe cdividend cwill cbe cpaid cat cthe cend cof cthe cyear. cThe canalyst
cconsensus cis cthe cstock cwill cbe cworth c$36 cin cone cyear. cThe ccompany cpays c$2.25 cannual cdividend. c(The cex-dividend cdate
cis cnot ca cconsideration; cthe cbroker cwill creceive cthe cfull c$2.25). cThe cbroker cexpects ca c12% crate cof creturn.
What cis cthe chighest cprice cthis cbroker cshould cbe cwilling cto cpay cfor cthis cstock? c- cCORRECT cANS✔✔$34.15
A cperson cbuys cshares cof ca ccompany cat c$45 cand crecently cpaid ca c$2 cannual cdividend cthat cis cexpected cto cgrow cby c10%
cper cyear.
What cis cthe cexpected creturn cper cyear? c- cCORRECT cANS✔✔14.9%
