Page 1 of 27
WGU C214 FINANCIAL MGMT PASS THE OA 2025/2026 EXAM
QUESTIONS AND DETAILED CORRECT ANSWERS
Terms in this set (160) Q & A
Characteristics of preferred stock includes
-answer- -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)
Preferred stock dividends
-answer- can go without payment and pay in arrears the following year
Characteristics of common stock are
-answer- -voting rights
-no maturity date
-corporate governance
, Page 2 of 27
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue
-answer- preferred stock (in an IPO)
What stock is considered a hybrid
-answer- preferred stock
One thing common stock and preferred stock have in common is
-answer- both have no maturity date
Which type of security has voting rights
-answer- common stock
Debt covenants and restrictions help to ensure that
-answer- management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds
-answer- -when bond matures, bondholder gets lump sum back
, Page 3 of 27
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when
-answer- required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital
-answer- because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks underwriting the
security issue
What type of bond can be traded for stock
-answer- convertible bonds
What is the interest rate for annual payments of a bond known as
-answer- the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and will remain
unchanged
Coupon rate is the established rate of the bond and should
-answer- never change
WGU C214 FINANCIAL MGMT PASS THE OA 2025/2026 EXAM
QUESTIONS AND DETAILED CORRECT ANSWERS
Terms in this set (160) Q & A
Characteristics of preferred stock includes
-answer- -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)
Preferred stock dividends
-answer- can go without payment and pay in arrears the following year
Characteristics of common stock are
-answer- -voting rights
-no maturity date
-corporate governance
, Page 2 of 27
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock
New start up ventures often issue
-answer- preferred stock (in an IPO)
What stock is considered a hybrid
-answer- preferred stock
One thing common stock and preferred stock have in common is
-answer- both have no maturity date
Which type of security has voting rights
-answer- common stock
Debt covenants and restrictions help to ensure that
-answer- management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds
-answer- -when bond matures, bondholder gets lump sum back
, Page 3 of 27
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000
Bond sells at face value when
-answer- required rate of return is equal to the coupon rate
Why are bonds the primary method for raising capital
-answer- because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks underwriting the
security issue
What type of bond can be traded for stock
-answer- convertible bonds
What is the interest rate for annual payments of a bond known as
-answer- the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and will remain
unchanged
Coupon rate is the established rate of the bond and should
-answer- never change
