1
C214 - Financial Management Study
Guide – WGU 2025/2026 Exam
Questions and Verified Answers |
Already Graded A+
Hedging - 🧠 ANSWER ✔✔The process of eliminating risk
Tariffs - 🧠 ANSWER ✔✔Taxes levied on goods imported into a country
Foreign Exchange Risk (AKA FX Risk) - 🧠 ANSWER ✔✔Risks associated with
the changing values of countries' concurrences
Direct Quote - 🧠 ANSWER ✔✔If you are located in the United States, a direct
quote is one where the foreign currency is in the denominator of the quote.
EUR/USD = €1.11
Indirect Quote - 🧠 ANSWER ✔✔When a currency exchange rate is started with the
currency of interest in the denominator. USD/EUR = $0.901
Floating Exchange Rate - 🧠 ANSWER ✔✔If a country follows a floating exchange
rate policy, the value of the currency is determined strictly by supply and demand
in the open market.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
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STATEMENT. ALL RIGHTS RESERVED
,2
Fixed (Pegged) Exchange Rate - 🧠 ANSWER ✔✔A country's monetary authority
(e.g., the Bank of England for the UK) intervenes to maintain a constant value of
the country's currency.
Managed (Dirty Floating) Exchange Rate - 🧠 ANSWER ✔✔Currencies are
generally allowed to float but the fluctuations are managed. A managed float is
essentially a policy of allowing a currency to float within a minimum and
maximum value.
The two primary methods used to hedge FX risk are: - 🧠 ANSWER ✔✔Financial
derivatives and direct investment.
Financial Derivatives - 🧠 ANSWER ✔✔To use a derivative contract also known as
a Currency Forward.
Currency Forward - 🧠 ANSWER ✔✔An agreement for delayed delivery.
Direct Investment - 🧠 ANSWER ✔✔A direct investment strategy requires a firm
build infrastructure in the country where sales occur. It's very straight forward.
FX Hedging - 🧠 ANSWER ✔✔Allows firms to focus on making profits through
their operations and not trying to guess which direction FX rates will move.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
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STATEMENT. ALL RIGHTS RESERVED
, 3
Tariffs - 🧠 ANSWER ✔✔The motivation for tariffs is the protection of domestic
industries.
Currency Restrictions - 🧠 ANSWER ✔✔The idea is to limit the ability of a foreign
firm to take capital out of a country.
FASB (Financial Accounting Standards Board) - 🧠 ANSWER ✔✔The U.S.
accounting system is governed by the Financial Accounting Standards Board
(FASB), which is a private non-profit organization that attempts to establish and
regulate the generally accepted accounting principles of firms.
Outsourcing - 🧠 ANSWER ✔✔To produce a product or service outside of the
country.
Outsourcing Disadvantage - 🧠 ANSWER ✔✔A potential disadvantage to this type
of outsourcing is that manufacturing jobs have dried up in the U.S.
Capital - 🧠 ANSWER ✔✔A financial asset the can be used by a firm. An example
of capital may be cash held by a firm or machinery.
Equity - 🧠 ANSWER ✔✔Ownership in an asset such as a company. Often another
name for stock.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
3
STATEMENT. ALL RIGHTS RESERVED
C214 - Financial Management Study
Guide – WGU 2025/2026 Exam
Questions and Verified Answers |
Already Graded A+
Hedging - 🧠 ANSWER ✔✔The process of eliminating risk
Tariffs - 🧠 ANSWER ✔✔Taxes levied on goods imported into a country
Foreign Exchange Risk (AKA FX Risk) - 🧠 ANSWER ✔✔Risks associated with
the changing values of countries' concurrences
Direct Quote - 🧠 ANSWER ✔✔If you are located in the United States, a direct
quote is one where the foreign currency is in the denominator of the quote.
EUR/USD = €1.11
Indirect Quote - 🧠 ANSWER ✔✔When a currency exchange rate is started with the
currency of interest in the denominator. USD/EUR = $0.901
Floating Exchange Rate - 🧠 ANSWER ✔✔If a country follows a floating exchange
rate policy, the value of the currency is determined strictly by supply and demand
in the open market.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
1
STATEMENT. ALL RIGHTS RESERVED
,2
Fixed (Pegged) Exchange Rate - 🧠 ANSWER ✔✔A country's monetary authority
(e.g., the Bank of England for the UK) intervenes to maintain a constant value of
the country's currency.
Managed (Dirty Floating) Exchange Rate - 🧠 ANSWER ✔✔Currencies are
generally allowed to float but the fluctuations are managed. A managed float is
essentially a policy of allowing a currency to float within a minimum and
maximum value.
The two primary methods used to hedge FX risk are: - 🧠 ANSWER ✔✔Financial
derivatives and direct investment.
Financial Derivatives - 🧠 ANSWER ✔✔To use a derivative contract also known as
a Currency Forward.
Currency Forward - 🧠 ANSWER ✔✔An agreement for delayed delivery.
Direct Investment - 🧠 ANSWER ✔✔A direct investment strategy requires a firm
build infrastructure in the country where sales occur. It's very straight forward.
FX Hedging - 🧠 ANSWER ✔✔Allows firms to focus on making profits through
their operations and not trying to guess which direction FX rates will move.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
2
STATEMENT. ALL RIGHTS RESERVED
, 3
Tariffs - 🧠 ANSWER ✔✔The motivation for tariffs is the protection of domestic
industries.
Currency Restrictions - 🧠 ANSWER ✔✔The idea is to limit the ability of a foreign
firm to take capital out of a country.
FASB (Financial Accounting Standards Board) - 🧠 ANSWER ✔✔The U.S.
accounting system is governed by the Financial Accounting Standards Board
(FASB), which is a private non-profit organization that attempts to establish and
regulate the generally accepted accounting principles of firms.
Outsourcing - 🧠 ANSWER ✔✔To produce a product or service outside of the
country.
Outsourcing Disadvantage - 🧠 ANSWER ✔✔A potential disadvantage to this type
of outsourcing is that manufacturing jobs have dried up in the U.S.
Capital - 🧠 ANSWER ✔✔A financial asset the can be used by a firm. An example
of capital may be cash held by a firm or machinery.
Equity - 🧠 ANSWER ✔✔Ownership in an asset such as a company. Often another
name for stock.
COPYRIGHT©NINJANERD 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE. PRIVACY
3
STATEMENT. ALL RIGHTS RESERVED
