1
WGU C214 Financial Mgmt Pass the
OA Questions and Correct Detailed
Answers (Verified Answers)
Q: Characteristics of preferred stock includes
Ans: -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)
Q: Preferred stock dividends
Ans: can go without payment and pay in arrears the following year
Master01 | 2025/2026 | Latest update
, 2
Q: Characteristics of common stock are
Ans: -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
Q: New start up ventures often issue
Ans: preferred stock (in an IPO)
Q: What stock is considered a hybrid
Ans: preferred stock
Q: One thing common stock and preferred stock have in common
is
Ans: both have no maturity date
Master01 | 2025/2026 | Latest update
, 3
Q: Which type of security has voting rights
Ans: common stock
Q: Debt covenants and restrictions help to ensure that
Ans: management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
Q: What is true regarding bonds
Ans: -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
Q: Bond sells at face value when
Ans: required rate of return is equal to the coupon rate
Q: Why are bonds the primary method for raising capital
Master01 | 2025/2026 | Latest update
, 4
Ans: because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
Q: What type of bond can be traded for stock
Ans: convertible bonds
Q: What is the interest rate for annual payments of a bond
known as
Ans: the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and
will remain unchanged
Q: Coupon rate is the established rate of the bond and should
Ans: never change
Q: Debentures are
Master01 | 2025/2026 | Latest update
WGU C214 Financial Mgmt Pass the
OA Questions and Correct Detailed
Answers (Verified Answers)
Q: Characteristics of preferred stock includes
Ans: -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)
Q: Preferred stock dividends
Ans: can go without payment and pay in arrears the following year
Master01 | 2025/2026 | Latest update
, 2
Q: Characteristics of common stock are
Ans: -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
Q: New start up ventures often issue
Ans: preferred stock (in an IPO)
Q: What stock is considered a hybrid
Ans: preferred stock
Q: One thing common stock and preferred stock have in common
is
Ans: both have no maturity date
Master01 | 2025/2026 | Latest update
, 3
Q: Which type of security has voting rights
Ans: common stock
Q: Debt covenants and restrictions help to ensure that
Ans: management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
Q: What is true regarding bonds
Ans: -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
Q: Bond sells at face value when
Ans: required rate of return is equal to the coupon rate
Q: Why are bonds the primary method for raising capital
Master01 | 2025/2026 | Latest update
, 4
Ans: because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue
Q: What type of bond can be traded for stock
Ans: convertible bonds
Q: What is the interest rate for annual payments of a bond
known as
Ans: the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and
will remain unchanged
Q: Coupon rate is the established rate of the bond and should
Ans: never change
Q: Debentures are
Master01 | 2025/2026 | Latest update
