WGU D775 EXAM QUESTIONS AND
ANSWERS
QUESTIONS AND ANSWERS
Risk-return trade-off. ANSWER -A principle that guides business finance to optimize
resource use.
Capital raising. ANSWER -Securing funding for business operations and projects.
Money management activity. ANSWER -Involves the creation, circulation, and
management of money.
Common stock. ANSWER -A share of ownership in a firm with voting rights.
Preferred stock characteristic. ANSWER -Fixed dividends.
Purpose of bonds for issuers. ANSWER -To raise capital without diluting ownership.
Junk bonds. ANSWER -Speculative bonds.
Options in financial derivatives. ANSWER -They give the buyer the right, but not the
obligation, to buy or sell an asset.
, Economies of scale for funds. ANSWER -By making large-scale investments that reduce
transaction costs.
Initial public offering (IPO). ANSWER -The first sale of a company's stock to the public.
Secondary market activity. ANSWER -The trading of stocks on the New York Stock
Exchange.
Types of financial markets. ANSWER -Primary markets and secondary markets.
Role of financial regulators. ANSWER -Ensuring fair and transparent markets.
Depository institutions. ANSWER -Institutions that accept deposits and provide loans.
Primary source of revenue for depository institutions. ANSWER -Interest income from
loans.
Rising Consumer Price Index (CPI) effect. ANSWER -It indicates increased costs for raw
materials and labor.
Return on equity goals. ANSWER -Beating their return on equity goals for each quarter
Environmental, social, and governance (ESG) criteria. ANSWER -Impact of integrating
ESG criteria into investment decisions
Long-term risks. ANSWER -Seeking long-term risks to protect stakeholders
Financial ratios for investors. ANSWER -Purpose of using financial ratios for investors
Standardized basis for performance evaluation. ANSWER -How financial ratios help in
comparing companies
ANSWERS
QUESTIONS AND ANSWERS
Risk-return trade-off. ANSWER -A principle that guides business finance to optimize
resource use.
Capital raising. ANSWER -Securing funding for business operations and projects.
Money management activity. ANSWER -Involves the creation, circulation, and
management of money.
Common stock. ANSWER -A share of ownership in a firm with voting rights.
Preferred stock characteristic. ANSWER -Fixed dividends.
Purpose of bonds for issuers. ANSWER -To raise capital without diluting ownership.
Junk bonds. ANSWER -Speculative bonds.
Options in financial derivatives. ANSWER -They give the buyer the right, but not the
obligation, to buy or sell an asset.
, Economies of scale for funds. ANSWER -By making large-scale investments that reduce
transaction costs.
Initial public offering (IPO). ANSWER -The first sale of a company's stock to the public.
Secondary market activity. ANSWER -The trading of stocks on the New York Stock
Exchange.
Types of financial markets. ANSWER -Primary markets and secondary markets.
Role of financial regulators. ANSWER -Ensuring fair and transparent markets.
Depository institutions. ANSWER -Institutions that accept deposits and provide loans.
Primary source of revenue for depository institutions. ANSWER -Interest income from
loans.
Rising Consumer Price Index (CPI) effect. ANSWER -It indicates increased costs for raw
materials and labor.
Return on equity goals. ANSWER -Beating their return on equity goals for each quarter
Environmental, social, and governance (ESG) criteria. ANSWER -Impact of integrating
ESG criteria into investment decisions
Long-term risks. ANSWER -Seeking long-term risks to protect stakeholders
Financial ratios for investors. ANSWER -Purpose of using financial ratios for investors
Standardized basis for performance evaluation. ANSWER -How financial ratios help in
comparing companies
