WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
1.1 T/F: Banks make money when the interest they charge to their borrowers is less than interest rates
paid to their lenders - ANSWER-False. Banks must charge their borrowers more interest than they pay to
their lenders to make more money
1.1 T/F: Capital is defined as a financial asset - ANSWER-True
1.1 T/F: Corporate finance focuses on the decision making by management of the firm - ANSWER-True
1.1 T/F: Corporate finance is devoted to understanding various types of financial instruments - ANSWER-
False - Investments is devoted to understanding various types of financial instruments
1.1 T/F: Economics is a subfield of finance - ANSWER-False
1.1 T/F: Stocks and bonds are two types of financial instruments - ANSWER-True
1.1 What are the 3 important areas of finance covered in this section - ANSWER-Corporate finance,
investments, and banking/financial institutions
1.1 Which is firm capital: Bank deposits, cash, the firm's worth, or none of these - ANSWER-Cash
1.1 Which of the following is not an example of firm capital? (Cash, machinery, labor, financial markets) -
ANSWER-Financial markets
1.10 Maximizing shareholder value ethically can improve society generally by:
Employing additional workers
Creating growth and leading to increased production by other firms
Increasing the profitability of other firms because of increased consumption
All of these choices - ANSWER-All of these choices
WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
, WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
1.10 T/F: Agency costs are commonly mitigated by compensating management with company stock. -
ANSWER-True
1.10 T/F: Agency costs are commonly mitigated by increasing management compensation. - ANSWER-
False - Agency costs are not commonly mitigated by increasing management compensation.
1.10 T/F: Agency costs are costs that are incurred when management does not act in the best interest of
shareholders. - ANSWER-True
1.10 T/F: An example of agency costs is a firm's decision to invest in a project because management
enjoys working on the project. - ANSWER-True
1.10 T/F: An example of agency costs is increased costs incurred because of higher levels of production. -
ANSWER-An example of agency costs is not increased costs incurred because of higher levels of
production.
1.10 T/F: An example of agency costs is management spending company money on unprofitable goods
and services. - ANSWER-True
1.10 T/F: Firms try to mitigate agency costs by aligning managers' interests with shareholders' interests.
TrueFalse - ANSWER-True
1.10 What issue(s) are associated with the firm goal to maximize shareholder value?
Agency costs and high profit returns
The goal is unattainable
Potential unethical behavior
Agency costs and potential unethical behavior
None of these choices - ANSWER-Agency costs and potential unethical behavior
WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
2025
1.1 T/F: Banks make money when the interest they charge to their borrowers is less than interest rates
paid to their lenders - ANSWER-False. Banks must charge their borrowers more interest than they pay to
their lenders to make more money
1.1 T/F: Capital is defined as a financial asset - ANSWER-True
1.1 T/F: Corporate finance focuses on the decision making by management of the firm - ANSWER-True
1.1 T/F: Corporate finance is devoted to understanding various types of financial instruments - ANSWER-
False - Investments is devoted to understanding various types of financial instruments
1.1 T/F: Economics is a subfield of finance - ANSWER-False
1.1 T/F: Stocks and bonds are two types of financial instruments - ANSWER-True
1.1 What are the 3 important areas of finance covered in this section - ANSWER-Corporate finance,
investments, and banking/financial institutions
1.1 Which is firm capital: Bank deposits, cash, the firm's worth, or none of these - ANSWER-Cash
1.1 Which of the following is not an example of firm capital? (Cash, machinery, labor, financial markets) -
ANSWER-Financial markets
1.10 Maximizing shareholder value ethically can improve society generally by:
Employing additional workers
Creating growth and leading to increased production by other firms
Increasing the profitability of other firms because of increased consumption
All of these choices - ANSWER-All of these choices
WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
, WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
1.10 T/F: Agency costs are commonly mitigated by compensating management with company stock. -
ANSWER-True
1.10 T/F: Agency costs are commonly mitigated by increasing management compensation. - ANSWER-
False - Agency costs are not commonly mitigated by increasing management compensation.
1.10 T/F: Agency costs are costs that are incurred when management does not act in the best interest of
shareholders. - ANSWER-True
1.10 T/F: An example of agency costs is a firm's decision to invest in a project because management
enjoys working on the project. - ANSWER-True
1.10 T/F: An example of agency costs is increased costs incurred because of higher levels of production. -
ANSWER-An example of agency costs is not increased costs incurred because of higher levels of
production.
1.10 T/F: An example of agency costs is management spending company money on unprofitable goods
and services. - ANSWER-True
1.10 T/F: Firms try to mitigate agency costs by aligning managers' interests with shareholders' interests.
TrueFalse - ANSWER-True
1.10 What issue(s) are associated with the firm goal to maximize shareholder value?
Agency costs and high profit returns
The goal is unattainable
Potential unethical behavior
Agency costs and potential unethical behavior
None of these choices - ANSWER-Agency costs and potential unethical behavior
WGU C214 QUESTIONS WITH CORRECT ANSWERS
2025
