WGU C214 FINANCIAL MANAGEMENT
CONCEPTS ONLY MULTIPLE CHOICE
STUDY GUIDE 2026 COMPREHENSIVE
EXAM REVIEW PRACTICE QUESTIONS
AND CORRECT ANSWERS OBJECTIVE
ASSESSMENT OA PREP GRADE A+
Which three costs are associated with holding inventory?
A. Variable costs
B. Opportunity costs
C. Storage costs
D. Product costs
E. Fixed costs - CORRECT ANSWER -b, c, d
Which ratio is used in the comparable multiples method?
A. Quick ratio
B. Current ratio
C. Price earnings ratio
D. Debt to equity ratio - CORRECT ANSWER -c
Investors will often sell a stock that has gains rather than a stock that is
suffering losses in their portfolio, despite subsidized tax relief when selling
at a loss. What the logic-defying behavioral implications of such a decision.
A. Selling a stock at a gain results in dollar cost average benefits
,B. Maintaining winning positions in the portfolio enhances future portfolio
growth rate
C. Investors hate taking a loss, especially when they can realize a gain
D. Selling an equity position at any point results in a favorable tax benefit -
CORRECT ANSWER -b
How are the Security and Exchange Commissions' Regulation S and Rule
144A similar?
A. Both use incentives and penalties to ensure fair dealings between large
financial institutions and small investors.
B. Both allow firms to raise capital without registering with the SEC if
certain conditions are met
C. Both are intended to increase transparency of financial markets
D. Both encourage specialized training by individuals designated to sell
securities - CORRECT ANSWER -b
What is the primary intent of the Sarbanes-Oxley Act?
A. To impose requirements on stockholders of public companies
B. To reduce the fees associated with financial transactions
C. To control the rise in the rate of executive compensation
D. To ensure honest audit and accounting procedures - CORRECT ANSWER -
d
Which element is a required disclosure in the prospectus, according to the
Securities Act of 1933?
A. Internal control reports
,B. Tax returns
C. Audited financial statements
D. Budgets - CORRECT ANSWER -c
Which condition must be met for a firm that trades in equities to be in
compliance with the Securities and Exchange (SEC) regulations?
Securities and Exchange (SEC) regulations?
A. Payments pursuant to the Sarbanes-Oxley Act
B. Participation in the MSRB (Municipal Securities Rulemaking Board)
C. Certification under the Dodd-Frank Act
D. Membership in FINRA (Financial Industry Regulatory Authority) -
CORRECT ANSWER -d
Which practice is limited by the Volcker rule of the Dodd-Frank Act?
A. The role of inside directors
B. Issuance of limited prospectuses
C. Bank investments in hedge funds
D. Conflicts of interests by bank board members - CORRECT ANSWER -c
What is beta?
A. An absolute measure of idiosyncratic risk
B. A measure of market value relative to the market risk
C. An absolute measure of systematic risk
D. A measure of systematic risk, relative to the market risk - CORRECT
ANSWER -c
, What do investors, entrepreneurs and other market participants rely on the
SEC to do?
A. Determine safety and efficiency of investment by US and foreign
investors
B. Regulate the Money Supply
C. Prohibit foreign bribery
D. Require Private Firms to Register - CORRECT ANSWER -a
What is one way a firm maximizes shareholder value?
A. By switching inventory methods
B. By reducing the firm's labor force
C. By outsourcing the production of the firm's core product
D. By avoiding investments that cost more money than they bring in -
CORRECT ANSWER -d
What is one of the two basic types of financial instruments?
A. Money Markets
B. Mutual Funds
C. Stocks
D. Options - CORRECT ANSWER -c
The stock price of a company increases and the market is deemed efficient.
What assumption can be made?
A. A new, patented, product was introduced to the market.
CONCEPTS ONLY MULTIPLE CHOICE
STUDY GUIDE 2026 COMPREHENSIVE
EXAM REVIEW PRACTICE QUESTIONS
AND CORRECT ANSWERS OBJECTIVE
ASSESSMENT OA PREP GRADE A+
Which three costs are associated with holding inventory?
A. Variable costs
B. Opportunity costs
C. Storage costs
D. Product costs
E. Fixed costs - CORRECT ANSWER -b, c, d
Which ratio is used in the comparable multiples method?
A. Quick ratio
B. Current ratio
C. Price earnings ratio
D. Debt to equity ratio - CORRECT ANSWER -c
Investors will often sell a stock that has gains rather than a stock that is
suffering losses in their portfolio, despite subsidized tax relief when selling
at a loss. What the logic-defying behavioral implications of such a decision.
A. Selling a stock at a gain results in dollar cost average benefits
,B. Maintaining winning positions in the portfolio enhances future portfolio
growth rate
C. Investors hate taking a loss, especially when they can realize a gain
D. Selling an equity position at any point results in a favorable tax benefit -
CORRECT ANSWER -b
How are the Security and Exchange Commissions' Regulation S and Rule
144A similar?
A. Both use incentives and penalties to ensure fair dealings between large
financial institutions and small investors.
B. Both allow firms to raise capital without registering with the SEC if
certain conditions are met
C. Both are intended to increase transparency of financial markets
D. Both encourage specialized training by individuals designated to sell
securities - CORRECT ANSWER -b
What is the primary intent of the Sarbanes-Oxley Act?
A. To impose requirements on stockholders of public companies
B. To reduce the fees associated with financial transactions
C. To control the rise in the rate of executive compensation
D. To ensure honest audit and accounting procedures - CORRECT ANSWER -
d
Which element is a required disclosure in the prospectus, according to the
Securities Act of 1933?
A. Internal control reports
,B. Tax returns
C. Audited financial statements
D. Budgets - CORRECT ANSWER -c
Which condition must be met for a firm that trades in equities to be in
compliance with the Securities and Exchange (SEC) regulations?
Securities and Exchange (SEC) regulations?
A. Payments pursuant to the Sarbanes-Oxley Act
B. Participation in the MSRB (Municipal Securities Rulemaking Board)
C. Certification under the Dodd-Frank Act
D. Membership in FINRA (Financial Industry Regulatory Authority) -
CORRECT ANSWER -d
Which practice is limited by the Volcker rule of the Dodd-Frank Act?
A. The role of inside directors
B. Issuance of limited prospectuses
C. Bank investments in hedge funds
D. Conflicts of interests by bank board members - CORRECT ANSWER -c
What is beta?
A. An absolute measure of idiosyncratic risk
B. A measure of market value relative to the market risk
C. An absolute measure of systematic risk
D. A measure of systematic risk, relative to the market risk - CORRECT
ANSWER -c
, What do investors, entrepreneurs and other market participants rely on the
SEC to do?
A. Determine safety and efficiency of investment by US and foreign
investors
B. Regulate the Money Supply
C. Prohibit foreign bribery
D. Require Private Firms to Register - CORRECT ANSWER -a
What is one way a firm maximizes shareholder value?
A. By switching inventory methods
B. By reducing the firm's labor force
C. By outsourcing the production of the firm's core product
D. By avoiding investments that cost more money than they bring in -
CORRECT ANSWER -d
What is one of the two basic types of financial instruments?
A. Money Markets
B. Mutual Funds
C. Stocks
D. Options - CORRECT ANSWER -c
The stock price of a company increases and the market is deemed efficient.
What assumption can be made?
A. A new, patented, product was introduced to the market.
