WGU - D076 GLOSSARY,WITH EXPLANATIONS GRADE
A+.TESTED & CONFIRMED ANSWERS.
Real Rate - CORRECT ANSWERS -An interest rate that is adjusted to remove the
effects of inflation.
Required Rate of Return - CORRECT ANSWERS -The minimum return or
compensation an investor requires in order to invest; see interest rate.
Research and Development - CORRECT ANSWERS -The business function
responsible for improving and developing services and products.
Retention Ratio - CORRECT ANSWERS -The percent of net income retained in the
firm; also called the plowback ratio.
Return - CORRECT ANSWERS -The money gained or lost on an investment over a
certain period of time.
Return On Assets (ROA) - CORRECT ANSWERS -A profitability ratio found by net
income divided by total assets.
Return On Equity (ROE) - CORRECT ANSWERS -A profitability ratio found by net
income divided by owners' equity.
Revenues - CORRECT ANSWERS -The top line of the income statement. The total
amount of money a business brings in (before subtracting any costs).
Risk - CORRECT ANSWERS -The possibility that the realized or actual return will differ
from the expected return.
Risk Avoidance - CORRECT ANSWERS -A way to manage risk by not performing an
activity that may carry risk.
Risk Premium - CORRECT ANSWERS -The compensation for the amount of risk taken
on by investors.
Risk Reduction - CORRECT ANSWERS -A series of techniques that help reduce the
amount of risk a person is exposed to by taking a particular action.
Risk Retention - CORRECT ANSWERS -A decision to take responsibility for a particular
risk.
Risk Separation - CORRECT ANSWERS -A risk management technique that involves
dispersing assets geographically instead of concentrating them in one location.
, Risk Transfer - CORRECT ANSWERS -A risk management technique that involves
reducing the amount of risk you are exposed to by transferring that risk to another
entity.
Risk-free Rate - CORRECT ANSWERS -The rate of return on an investment with no
risk.
Sales - CORRECT ANSWERS -The top line of the income statement. The total amount
of money a business brings in (before subtracting out any costs).
Seasonal Firms - CORRECT ANSWERS -Firms whose performance varies according to
the season.
Secondary Market - CORRECT ANSWERS -The financial market where securities are
traded after the initial issuance.
Securitization - CORRECT ANSWERS -The process of combining several types of
contractual debt (such as mortgages) and reselling them as a package to investors.
Shareholders - CORRECT ANSWERS -A person who owns shares of a company's
stock.
Simple Interest - CORRECT ANSWERS -The interest earned only on the principal.
Specialist - CORRECT ANSWERS -A market maker on the NYSE that holds an
inventory of securities and acts as a liquidity provider to those that wish to buy and sell.
Spontaneous Accounts - CORRECT ANSWERS -Accounts that vary naturally with
sales.
Stakeholder - CORRECT ANSWERS -Anyone who may be affected by actions taken or
a decision made.
Standard Deviation - CORRECT ANSWERS -A measure of dispersion of possible
outcomes about the mean.
Steady State Growth - CORRECT ANSWERS -The level of growth where four key
financial ratios—profitability, asset utilization, leverage, and payout—are constant and
where the firm does not need to issue any new equity to fund the growthAccounting -
CORRECT ANSWERS -The system of recording, reporting, and summarizing past
financial information and transactions.
Accounts Receivable Turnover (AR Turnover) - CORRECT ANSWERS -An activity ratio
found by credit sales divided by accounts receivable.
A+.TESTED & CONFIRMED ANSWERS.
Real Rate - CORRECT ANSWERS -An interest rate that is adjusted to remove the
effects of inflation.
Required Rate of Return - CORRECT ANSWERS -The minimum return or
compensation an investor requires in order to invest; see interest rate.
Research and Development - CORRECT ANSWERS -The business function
responsible for improving and developing services and products.
Retention Ratio - CORRECT ANSWERS -The percent of net income retained in the
firm; also called the plowback ratio.
Return - CORRECT ANSWERS -The money gained or lost on an investment over a
certain period of time.
Return On Assets (ROA) - CORRECT ANSWERS -A profitability ratio found by net
income divided by total assets.
Return On Equity (ROE) - CORRECT ANSWERS -A profitability ratio found by net
income divided by owners' equity.
Revenues - CORRECT ANSWERS -The top line of the income statement. The total
amount of money a business brings in (before subtracting any costs).
Risk - CORRECT ANSWERS -The possibility that the realized or actual return will differ
from the expected return.
Risk Avoidance - CORRECT ANSWERS -A way to manage risk by not performing an
activity that may carry risk.
Risk Premium - CORRECT ANSWERS -The compensation for the amount of risk taken
on by investors.
Risk Reduction - CORRECT ANSWERS -A series of techniques that help reduce the
amount of risk a person is exposed to by taking a particular action.
Risk Retention - CORRECT ANSWERS -A decision to take responsibility for a particular
risk.
Risk Separation - CORRECT ANSWERS -A risk management technique that involves
dispersing assets geographically instead of concentrating them in one location.
, Risk Transfer - CORRECT ANSWERS -A risk management technique that involves
reducing the amount of risk you are exposed to by transferring that risk to another
entity.
Risk-free Rate - CORRECT ANSWERS -The rate of return on an investment with no
risk.
Sales - CORRECT ANSWERS -The top line of the income statement. The total amount
of money a business brings in (before subtracting out any costs).
Seasonal Firms - CORRECT ANSWERS -Firms whose performance varies according to
the season.
Secondary Market - CORRECT ANSWERS -The financial market where securities are
traded after the initial issuance.
Securitization - CORRECT ANSWERS -The process of combining several types of
contractual debt (such as mortgages) and reselling them as a package to investors.
Shareholders - CORRECT ANSWERS -A person who owns shares of a company's
stock.
Simple Interest - CORRECT ANSWERS -The interest earned only on the principal.
Specialist - CORRECT ANSWERS -A market maker on the NYSE that holds an
inventory of securities and acts as a liquidity provider to those that wish to buy and sell.
Spontaneous Accounts - CORRECT ANSWERS -Accounts that vary naturally with
sales.
Stakeholder - CORRECT ANSWERS -Anyone who may be affected by actions taken or
a decision made.
Standard Deviation - CORRECT ANSWERS -A measure of dispersion of possible
outcomes about the mean.
Steady State Growth - CORRECT ANSWERS -The level of growth where four key
financial ratios—profitability, asset utilization, leverage, and payout—are constant and
where the firm does not need to issue any new equity to fund the growthAccounting -
CORRECT ANSWERS -The system of recording, reporting, and summarizing past
financial information and transactions.
Accounts Receivable Turnover (AR Turnover) - CORRECT ANSWERS -An activity ratio
found by credit sales divided by accounts receivable.
