WGU C214 FINANCIAL MANAGEMENT EXAM|WITH
QUESTIONS AND CORRECT ANSWERS ALREADY GRADED
A|LATEST UPDATE
1. The stock price of a company increases and the market is deemed efficient. What assumption can be
made?
Correct Answer: A. A new, patented, product was introduced to the market.
� Explanation: In an efficient market, stock prices immediately reflect all available public information. A
new, patented product suggests future profitability, thus increasing stock price.
2. Which statement is true about how the global market affects the U.S.?
Correct Answer: D. Foreign investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
� Explanation: Global capital markets are interconnected. Foreign investors often evaluate U.S. firms
using global financial reporting standards, impacting investment and economic activity.
3. What are secondary markets?
Correct Answer: A. Markets where securities are traded subsequent to the initial offering.
Explanation: In secondary markets, investors trade securities that have already been issued in the
primary market. Examples include the NYSE and NASDAQ.
, 4. A special interest group lobbies for protectionism through tariffs. What's the likely result?✅ Correct
Answer: D. Employees and shareholders of the domestic industry that produce the protected goods will
benefit and the nation will be hurt.
Explanation: Tariffs benefit specific industries shortterm but typically hurt consumers and the broader
economy due to inefficiencies and potential retaliation.
5. What do the content and structure of a balance sheet report?
Explanation: A balance sheet shows a company's financial position at a specific point in time. It includes
assets (what the company owns), liabilities (what it owes), and shareholders' equity (ownership
interest).
6. What is the basis used to compute a company's income tax expense?
Correct Answer: B. Taxable income.
� Explanation: Taxable income is the amount of income that is subject to income tax. It may differ from
accounting income due to tax rules and adjustments.
7. What is the firm’s cash flow from financing activities? Correct Answer: C. \$800 inflow
� Explanation: Financing cash flow includes inflows from longterm liabilities and outflows like dividends.
\$1,000 (from liabilities) \$200 (dividends) = \$800 inflow.
QUESTIONS AND CORRECT ANSWERS ALREADY GRADED
A|LATEST UPDATE
1. The stock price of a company increases and the market is deemed efficient. What assumption can be
made?
Correct Answer: A. A new, patented, product was introduced to the market.
� Explanation: In an efficient market, stock prices immediately reflect all available public information. A
new, patented product suggests future profitability, thus increasing stock price.
2. Which statement is true about how the global market affects the U.S.?
Correct Answer: D. Foreign investors and fund managers make decisions based on financial reporting
standards developed and financial statements audited overseas.
� Explanation: Global capital markets are interconnected. Foreign investors often evaluate U.S. firms
using global financial reporting standards, impacting investment and economic activity.
3. What are secondary markets?
Correct Answer: A. Markets where securities are traded subsequent to the initial offering.
Explanation: In secondary markets, investors trade securities that have already been issued in the
primary market. Examples include the NYSE and NASDAQ.
, 4. A special interest group lobbies for protectionism through tariffs. What's the likely result?✅ Correct
Answer: D. Employees and shareholders of the domestic industry that produce the protected goods will
benefit and the nation will be hurt.
Explanation: Tariffs benefit specific industries shortterm but typically hurt consumers and the broader
economy due to inefficiencies and potential retaliation.
5. What do the content and structure of a balance sheet report?
Explanation: A balance sheet shows a company's financial position at a specific point in time. It includes
assets (what the company owns), liabilities (what it owes), and shareholders' equity (ownership
interest).
6. What is the basis used to compute a company's income tax expense?
Correct Answer: B. Taxable income.
� Explanation: Taxable income is the amount of income that is subject to income tax. It may differ from
accounting income due to tax rules and adjustments.
7. What is the firm’s cash flow from financing activities? Correct Answer: C. \$800 inflow
� Explanation: Financing cash flow includes inflows from longterm liabilities and outflows like dividends.
\$1,000 (from liabilities) \$200 (dividends) = \$800 inflow.
