WGU D775 PRE-ASSESSMENT 2 EXAM QUESTIONS AND ANSWERS
1. What is the time orientation of financial decision-making
in business fi-nance?: Future projections and planning
2. How do businesses use financial ratios in their operations?: To
evaluate and improve business performance
3. What is a primary objective of business finance?: Maximizing
shareholder value
4. What are corporate bonds used for?: Financing operations and
expansions
5. What are financial derivatives based on?: Performance of underlying
assets, indexes, or rates
6. What is a future as a type of financial derivative?: A standardized
contract to buy or sell an asset at a specified future date and price
7. What distinguishes hedge funds from mutual funds?: They employ
diverse strategies and are available to sophisticated investors.
8. How do funds achieve diversification?: By pooling money from
multiple investors to invest in a variety of assets
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, 9. What do speculative bonds, or junk bonds, typically offer
compared to investment-grade bonds?: Higher risk and
higher returns
10. What is the advantage of investing in exchange-traded funds
(ETFs)?: They can be bought and sold throughout the trading day like
stocks.
11. Which market is an example of a dealer market?: National
Association of Securities Dealers Automated Quotations (NASDAQ)
12. Which market is an example of an auction market?: New York
Stock Exchange
13. What is the primary function of the Securities and
Exchange Commission (SEC)?: To regulate securities markets and
protect investors
14. What is the primary focus of the Commodity Futures
Trading Commission (CFTC)?: Overseeing futures and options
markets
15. Which role do insurance companies play in the financial
system?: Underwriting policies to protect against risks
16. How do insurance companies generate income?: By collecting
premiums and investing these funds
17. What is a key characteristic of private equity raising?: It involves
securing funds from private investors like venture capitalists.
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1. What is the time orientation of financial decision-making
in business fi-nance?: Future projections and planning
2. How do businesses use financial ratios in their operations?: To
evaluate and improve business performance
3. What is a primary objective of business finance?: Maximizing
shareholder value
4. What are corporate bonds used for?: Financing operations and
expansions
5. What are financial derivatives based on?: Performance of underlying
assets, indexes, or rates
6. What is a future as a type of financial derivative?: A standardized
contract to buy or sell an asset at a specified future date and price
7. What distinguishes hedge funds from mutual funds?: They employ
diverse strategies and are available to sophisticated investors.
8. How do funds achieve diversification?: By pooling money from
multiple investors to invest in a variety of assets
1/
13
, 9. What do speculative bonds, or junk bonds, typically offer
compared to investment-grade bonds?: Higher risk and
higher returns
10. What is the advantage of investing in exchange-traded funds
(ETFs)?: They can be bought and sold throughout the trading day like
stocks.
11. Which market is an example of a dealer market?: National
Association of Securities Dealers Automated Quotations (NASDAQ)
12. Which market is an example of an auction market?: New York
Stock Exchange
13. What is the primary function of the Securities and
Exchange Commission (SEC)?: To regulate securities markets and
protect investors
14. What is the primary focus of the Commodity Futures
Trading Commission (CFTC)?: Overseeing futures and options
markets
15. Which role do insurance companies play in the financial
system?: Underwriting policies to protect against risks
16. How do insurance companies generate income?: By collecting
premiums and investing these funds
17. What is a key characteristic of private equity raising?: It involves
securing funds from private investors like venture capitalists.
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13
