WGU D076 OBJECTIVE ASSESSMENT TEST FINAL EXAM 2
ALL NEWEST VERSIONS A AND B 2025/2026 COMPLETE 200
STUDY QUESTIONS WITH CORRECT VERIFIED ANSWERS
100% GUARANTEED PASS | RATED A+
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
ethical issue is occurring in this situation? - Answer>>> Agency problem due to conflicting
interests - Accounting manipulation by management in pursuit of higher stock-related
compensation is an example of an agency problem.
What allows an investor to determine which financial activities are contributing to changes in the
return on equity? - Answer>>> DuPont framework - Decomposing the DuPont framework
enables analysis of fundamental performance to determine which financial activities are
contributing to changes in the return on equity.
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? - Answer>>> Making investment decisions -Understanding how benefits weigh up
against costs is the first priority before moving forward with financing and managerial decisions.
You are considering starting a new business to sell Widgets in your hometown. You can import
the Widgets at a low cost, and you hope to be able to sell them for significantly more. Which
ratio can help you calculate how much profit you will earn from the sale of each Widget?
(Assume you are only considering the cost of the Widget, not any other operating costs.) -
Answer>>> Gross margin - Gross margin tells you the percent of sales that become gross profit.
The rest of the money earned from sales is used for the production of goods.
Knowing that you are taking this finance class, a friend asks you about two investment
opportunities he is considering. He wants to know which of the firms is using its assets more
efficiently to generate sales. Which set of information could help you determine this? -
Answer>>> Firm A has an asset turnover of 4, and Firm B has an asset turnover of 2.5. - Asset
turnover is an indicator of how well a firm uses its assets to generate sales. Since Firm A
generates $4 of sales for every $1 of assets, it is using its assets more efficiently.
,In which situation would a firm need to borrow cash? - Answer>>> When the beginning cash
balance plus the net cash is less than the minimum cash balance required for the month - This
indicates to a firm that additional financing will be needed during the period to operate
effectively.
How can you use the envelope method of budgeting to monitor cash flows? - Answer>>> Put the
amount of money budgeted for each category of your expenses into labeled envelopes and then
spend the money in each envelope on expenses in that category.
How should you go about making changes to your budget? - Answer>>> Prioritize the changes
you want to make and then implement them gradually one by one to make sure they work.
What must be determined in order to compare the values of two projects with differently timed
cash flows that does not need to be determined for projects with similarly timed cash flows? -
Answer>>> Opportunity cost - Opportunity cost must be determined to analyze two such
projects.
What is the disadvantage of debt financing? - Answer>>> Debt financing does not actually
achieve an optimal capital structure for a company. - Debt creates a tax shield, but there should
be a mixture of debt and equity in an optimal capital structure.
How do you factor sunk costs into capital investment analysis? - Answer>>> For the purposes of
analysis, sunk costs are irrelevant. - Sunk costs are costs that have already been incurred whether
you choose to do a project or not.
What does the term legal describe? - Answer>>> An action that is in accordance with the laws
and rules set by an authority. -
Jack is a personal financial advisor. He is with a new client, and the client is asking him what he
recommends for her portfolio. Jack knows that his firm's investment product performed well last
year, but its performance changes from year to year—some years it is better than the market, and
some years it is not. Also, the fee to invest in the product is higher than the fee to invest in a
market index fund. If Jack sells his company's investment product, the customer's loyalty to the
company is doubled. Which actions should Jack take? - Answer>>> Give a personal
, recommendation of the company's product while explaining its performance relative to the
market over the past several years.-
Giving the recommendation to sell a product is fine, but you should never hide other
information. Sharing information about index funds and comparing your product to others is a
fair action to take for the client.
Why might a manager manipulate accounting procedures? - Answer>>> To make the company's
performance look good -
A manager might manipulate accounting procedures to inflate the earnings of a company, which
would optimize bonuses and stock-price-related benefits for management.
Which situation is an example of an agency problem? - Answer>>> Managers follow their own
interests instead of the owners' interest. - An agency problem occurs when the agent (a manager)
does not act in the best interest of the owners.
A company is trying to finance a project with a mortgage loan from a bank. The company's
assessment of the project indicates that the company may experience several years of loss until
the project becomes profitable. This means that the company might lose its ability to pay back
the loan and the interest on the mortgage. What action might the bank take to protect its interest?
- Answer>>> Set a strict covenant that the company cannot easily achieve. - By setting a strict
covenant, there is a risk that the company may not meet its obligation, which would deter the
company from taking on risky projects.
What are the main services offered by financial institutions? - Answer>>> Accepting a wide
variety of deposits, offering investment products, providing loans, and brokering financial
transactions -Financial institutions such as banks, insurance companies, and mutual fund
companies provide these services.
What is the main objective of personal financial goals? - Answer>>> To maximize individual
utility -You set goals and act to increase your satisfaction or happiness by taking care of
necessities and achieving priorities.
ALL NEWEST VERSIONS A AND B 2025/2026 COMPLETE 200
STUDY QUESTIONS WITH CORRECT VERIFIED ANSWERS
100% GUARANTEED PASS | RATED A+
A company's officers and board of directors are selling their stocks in the firm at higher prices
due to false accounting reports that made the stock seem more valuable than it truly was. Which
ethical issue is occurring in this situation? - Answer>>> Agency problem due to conflicting
interests - Accounting manipulation by management in pursuit of higher stock-related
compensation is an example of an agency problem.
What allows an investor to determine which financial activities are contributing to changes in the
return on equity? - Answer>>> DuPont framework - Decomposing the DuPont framework
enables analysis of fundamental performance to determine which financial activities are
contributing to changes in the return on equity.
Which task does a financial manager perform when assessing the costs and benefits of potential
projects? - Answer>>> Making investment decisions -Understanding how benefits weigh up
against costs is the first priority before moving forward with financing and managerial decisions.
You are considering starting a new business to sell Widgets in your hometown. You can import
the Widgets at a low cost, and you hope to be able to sell them for significantly more. Which
ratio can help you calculate how much profit you will earn from the sale of each Widget?
(Assume you are only considering the cost of the Widget, not any other operating costs.) -
Answer>>> Gross margin - Gross margin tells you the percent of sales that become gross profit.
The rest of the money earned from sales is used for the production of goods.
Knowing that you are taking this finance class, a friend asks you about two investment
opportunities he is considering. He wants to know which of the firms is using its assets more
efficiently to generate sales. Which set of information could help you determine this? -
Answer>>> Firm A has an asset turnover of 4, and Firm B has an asset turnover of 2.5. - Asset
turnover is an indicator of how well a firm uses its assets to generate sales. Since Firm A
generates $4 of sales for every $1 of assets, it is using its assets more efficiently.
,In which situation would a firm need to borrow cash? - Answer>>> When the beginning cash
balance plus the net cash is less than the minimum cash balance required for the month - This
indicates to a firm that additional financing will be needed during the period to operate
effectively.
How can you use the envelope method of budgeting to monitor cash flows? - Answer>>> Put the
amount of money budgeted for each category of your expenses into labeled envelopes and then
spend the money in each envelope on expenses in that category.
How should you go about making changes to your budget? - Answer>>> Prioritize the changes
you want to make and then implement them gradually one by one to make sure they work.
What must be determined in order to compare the values of two projects with differently timed
cash flows that does not need to be determined for projects with similarly timed cash flows? -
Answer>>> Opportunity cost - Opportunity cost must be determined to analyze two such
projects.
What is the disadvantage of debt financing? - Answer>>> Debt financing does not actually
achieve an optimal capital structure for a company. - Debt creates a tax shield, but there should
be a mixture of debt and equity in an optimal capital structure.
How do you factor sunk costs into capital investment analysis? - Answer>>> For the purposes of
analysis, sunk costs are irrelevant. - Sunk costs are costs that have already been incurred whether
you choose to do a project or not.
What does the term legal describe? - Answer>>> An action that is in accordance with the laws
and rules set by an authority. -
Jack is a personal financial advisor. He is with a new client, and the client is asking him what he
recommends for her portfolio. Jack knows that his firm's investment product performed well last
year, but its performance changes from year to year—some years it is better than the market, and
some years it is not. Also, the fee to invest in the product is higher than the fee to invest in a
market index fund. If Jack sells his company's investment product, the customer's loyalty to the
company is doubled. Which actions should Jack take? - Answer>>> Give a personal
, recommendation of the company's product while explaining its performance relative to the
market over the past several years.-
Giving the recommendation to sell a product is fine, but you should never hide other
information. Sharing information about index funds and comparing your product to others is a
fair action to take for the client.
Why might a manager manipulate accounting procedures? - Answer>>> To make the company's
performance look good -
A manager might manipulate accounting procedures to inflate the earnings of a company, which
would optimize bonuses and stock-price-related benefits for management.
Which situation is an example of an agency problem? - Answer>>> Managers follow their own
interests instead of the owners' interest. - An agency problem occurs when the agent (a manager)
does not act in the best interest of the owners.
A company is trying to finance a project with a mortgage loan from a bank. The company's
assessment of the project indicates that the company may experience several years of loss until
the project becomes profitable. This means that the company might lose its ability to pay back
the loan and the interest on the mortgage. What action might the bank take to protect its interest?
- Answer>>> Set a strict covenant that the company cannot easily achieve. - By setting a strict
covenant, there is a risk that the company may not meet its obligation, which would deter the
company from taking on risky projects.
What are the main services offered by financial institutions? - Answer>>> Accepting a wide
variety of deposits, offering investment products, providing loans, and brokering financial
transactions -Financial institutions such as banks, insurance companies, and mutual fund
companies provide these services.
What is the main objective of personal financial goals? - Answer>>> To maximize individual
utility -You set goals and act to increase your satisfaction or happiness by taking care of
necessities and achieving priorities.
