WGU D076 Exam Questions with 100%
Correct Answers | Latest Update
Interest rate - ✔✔percentage of the principal that a lender charges a
borrower for the use of assets.
Cost of capital - ✔✔Also known as Discount rate, the cost to a firm to use
an investor's capital
Simple interest - ✔✔Annual Interest = Principal x Interest Rate
Total interest - ✔✔Total Interest = Annual interest x t
Compounding Interest - ✔✔otal Interest = Principal x (1+Interest Rate/over/
¿ ¿Numbers of periods - Principal
Required rate of return - ✔✔the rate of return or compensation that an
investor or a lender will accept for investments such as stocks, bonds, or
loans.
hurdle rate - ✔✔The word compensation is used because this is the rate
that investors or lenders will be compensated for a given level of risk
associated with investments or loans.
, Opportunity cost - ✔✔the loss of potential gain from other alternatives
when one alternative is chosen.
Risk - ✔✔possibility that the realized or actual return will differ from the
expected return.
Inflation - ✔✔the rate at which the average price level of goods and
services in an economy increases over a period of time.
Sources of inflation - ✔✔1:Increased demand for goods and services
2:Rising costs
3:Adaptive expectations- when prices of goods and services go up,
employees expect and even demand higher wages to maintain their
standard of living.
Decomposing Interest Rate - ✔✔Rate = Risk-Free Rate + Risk Premium
Real rate - ✔✔same as the growth rate in purchasing power, even though
the formula seems different. This is call the Fisher Effect, an economic
theory created by the economist Irving Fisher.
Why Are Ratios Useful - ✔✔1. Standardization- Ratios standardize
financial data to make them comparable across firms, even those of
distinctly different sizes.
2. Flexibility
Correct Answers | Latest Update
Interest rate - ✔✔percentage of the principal that a lender charges a
borrower for the use of assets.
Cost of capital - ✔✔Also known as Discount rate, the cost to a firm to use
an investor's capital
Simple interest - ✔✔Annual Interest = Principal x Interest Rate
Total interest - ✔✔Total Interest = Annual interest x t
Compounding Interest - ✔✔otal Interest = Principal x (1+Interest Rate/over/
¿ ¿Numbers of periods - Principal
Required rate of return - ✔✔the rate of return or compensation that an
investor or a lender will accept for investments such as stocks, bonds, or
loans.
hurdle rate - ✔✔The word compensation is used because this is the rate
that investors or lenders will be compensated for a given level of risk
associated with investments or loans.
, Opportunity cost - ✔✔the loss of potential gain from other alternatives
when one alternative is chosen.
Risk - ✔✔possibility that the realized or actual return will differ from the
expected return.
Inflation - ✔✔the rate at which the average price level of goods and
services in an economy increases over a period of time.
Sources of inflation - ✔✔1:Increased demand for goods and services
2:Rising costs
3:Adaptive expectations- when prices of goods and services go up,
employees expect and even demand higher wages to maintain their
standard of living.
Decomposing Interest Rate - ✔✔Rate = Risk-Free Rate + Risk Premium
Real rate - ✔✔same as the growth rate in purchasing power, even though
the formula seems different. This is call the Fisher Effect, an economic
theory created by the economist Irving Fisher.
Why Are Ratios Useful - ✔✔1. Standardization- Ratios standardize
financial data to make them comparable across firms, even those of
distinctly different sizes.
2. Flexibility
