WGU C214 Financial Management Final Exam 108
Questions with Verified Answers
The interest rate that a company promises to pay on bonds - CORRECT ANSWER
Coupon Rate
The interest rate on other comparable bonds - CORRECT ANSWER Market Rate
The amount payable on maturity of the bond - CORRECT ANSWER Par Value
Same as YTM - Yield to Maturity - CORRECT ANSWER Market rate
Assumes stable growth rates and does not incorporate risk - CORRECT ANSWER
Gordon Growth Model
Allows to determine expected return on stocks and incorporates risk - CORRECT
ANSWER CAPM Model
By maximizing Earnings Per Share - CORRECT ANSWER How do public companies
maximize shareholder value?
By keeping control within the company - CORRECT ANSWER How do private
companies maximize shareholder value?
, Lowers cost of capital - CORRECT ANSWER Positive credit rating has what effect on
capital?
It is cash flow generated for sale of products and services - CORRECT ANSWER
What is cash flow from operating activities?
Ending retained earnings=Beginning retained earnings + Net Income = Dividends -
CORRECT ANSWER What is the formula for retained earnings?
It is an estimate - CORRECT ANSWER Is depreciation and salvage value on an asset
precise or is it an estimate?
Companies using different accounting methods - CORRECT ANSWER What is an
example of accounting difference
Companies using different fiscal years - CORRECT ANSWER What is an example of
a timing difference?
Stock holders have voting rights - CORRECT ANSWER Do stock holders or bond
holders have voting rights?
Purchase price of new equipment, shipping costs, and investment in working
capital - CORRECT ANSWER What factors are considered for the initial outlay of a
new investment?
Questions with Verified Answers
The interest rate that a company promises to pay on bonds - CORRECT ANSWER
Coupon Rate
The interest rate on other comparable bonds - CORRECT ANSWER Market Rate
The amount payable on maturity of the bond - CORRECT ANSWER Par Value
Same as YTM - Yield to Maturity - CORRECT ANSWER Market rate
Assumes stable growth rates and does not incorporate risk - CORRECT ANSWER
Gordon Growth Model
Allows to determine expected return on stocks and incorporates risk - CORRECT
ANSWER CAPM Model
By maximizing Earnings Per Share - CORRECT ANSWER How do public companies
maximize shareholder value?
By keeping control within the company - CORRECT ANSWER How do private
companies maximize shareholder value?
, Lowers cost of capital - CORRECT ANSWER Positive credit rating has what effect on
capital?
It is cash flow generated for sale of products and services - CORRECT ANSWER
What is cash flow from operating activities?
Ending retained earnings=Beginning retained earnings + Net Income = Dividends -
CORRECT ANSWER What is the formula for retained earnings?
It is an estimate - CORRECT ANSWER Is depreciation and salvage value on an asset
precise or is it an estimate?
Companies using different accounting methods - CORRECT ANSWER What is an
example of accounting difference
Companies using different fiscal years - CORRECT ANSWER What is an example of
a timing difference?
Stock holders have voting rights - CORRECT ANSWER Do stock holders or bond
holders have voting rights?
Purchase price of new equipment, shipping costs, and investment in working
capital - CORRECT ANSWER What factors are considered for the initial outlay of a
new investment?
