WGU C214 Financial Management | Objective
Assessment (OA) | Complete Exam Review &
Practice Questions
Grade A+
(2026-2027)
, Characteristics of preferred stock includes -dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends can go without payment and pay in arrears the following year
Characteristics of common stock are -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue preferred stock (in an IPO)
What stock is considered a hybrid preferred stock
One thing common stock and preferred stock have in both have no maturity date
common is
Which type of security has voting rights common stock
Debt covenants and restrictions help to ensure that management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds -when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
What type of bond can be traded for stock convertible bonds
What is the interest rate for annual payments of a bond the coupon rate
known as NOTE: coupon rate is the established interest rate for the life of the bond and will
remain unchanged
Assessment (OA) | Complete Exam Review &
Practice Questions
Grade A+
(2026-2027)
, Characteristics of preferred stock includes -dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)
Preferred stock dividends can go without payment and pay in arrears the following year
Characteristics of common stock are -voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue preferred stock (in an IPO)
What stock is considered a hybrid preferred stock
One thing common stock and preferred stock have in both have no maturity date
common is
Which type of security has voting rights common stock
Debt covenants and restrictions help to ensure that management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds -when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
What type of bond can be traded for stock convertible bonds
What is the interest rate for annual payments of a bond the coupon rate
known as NOTE: coupon rate is the established interest rate for the life of the bond and will
remain unchanged
