WGU D076 ALL UNIT TESTS
1. What are the main services offered by financial institutions?
ANS Accepting a wide variety of deposits, offering investment products,
providing loans, and brokering financial transactions
2. What is the main objective of personal financial goals?
ANS To maximize individ- ual utility
3. Which task does the financial manager of a firm perform that involves
the issuance of new stocks and bonds?
ANS Making financing decisions
4. Why is understanding the definition of finance important in managing
per- sonal finances?
ANS It helps individuals compare the costs and benefits of an action to
determine whether to take that action.
5. In which type of market would a company issue bonds or stocks for the
first time?
ANS Primary market
6. Which type of financial institution is a mutual fund?
ANS Investment institution
,7. Which financial institution specializes in managing and administering
re- tirement funds?
ANS Pension funds
8. Which type of economic indicator is the consumer price index?
ANS Lagging indicator
9. What does the term ethical refer to?
ANS The accepted standards of conduct that guide a person's behavior
10.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?
ANS Agency problem due to conflicting interests
11.Which area of finance involves deciding which assets to invest in to
create wealth in the future?
ANS Investments
12.What is the main goal of a firm?
ANS To maximize owner wealth
13.What are financial managers doing if they evaluate whether it is worth
spending money on research and development for a new product?
,ANS Making an investment decision
14.Which type of financial market is where securities such as stocks and
bonds are traded after their initial issuance?
ANS The secondary financial market
15.What type of financial institution is an insurance company?
ANS Contractual
16.Which financial institution invests funds contributed by a company
to provide retirement funds for the company's employees?
ANS Pension fund
17.Personal income is which type of economic indicator?
ANS Coincident
18.Which term refers to something that conforms with accepted standards
of conduct that guide a person's behavior?
ANS Ethical
19.What is the second step in finding a solution to an ethical dilemma?
ANS Con- sider alternative courses of action
, 20.Which type of interest rate includes interest on interest in addition
to interest on the principal?
ANS Compound interest
21.How can agency problems be reduced through corporate control?
ANS Execu- tive compensation
22.What is the rate at which the average price level of particular goods
and services in an economy increases over a period of time?
ANS Inflation rate
23.You signed an apartment contract today. You are going to pay $1,500 at
the beginning of each month for the next 12 months, starting today. What
type of cash flows is this contract?
ANS An annuity due
24.What is the term for the return over the entire period that an investor
owns a financial security?
ANS Holding period return
25.What is used to measure total risk?
ANS Standard deviation
26.What is the term for the risk that changes in interest rates will impact
the value of a bond?
1. What are the main services offered by financial institutions?
ANS Accepting a wide variety of deposits, offering investment products,
providing loans, and brokering financial transactions
2. What is the main objective of personal financial goals?
ANS To maximize individ- ual utility
3. Which task does the financial manager of a firm perform that involves
the issuance of new stocks and bonds?
ANS Making financing decisions
4. Why is understanding the definition of finance important in managing
per- sonal finances?
ANS It helps individuals compare the costs and benefits of an action to
determine whether to take that action.
5. In which type of market would a company issue bonds or stocks for the
first time?
ANS Primary market
6. Which type of financial institution is a mutual fund?
ANS Investment institution
,7. Which financial institution specializes in managing and administering
re- tirement funds?
ANS Pension funds
8. Which type of economic indicator is the consumer price index?
ANS Lagging indicator
9. What does the term ethical refer to?
ANS The accepted standards of conduct that guide a person's behavior
10.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?
ANS Agency problem due to conflicting interests
11.Which area of finance involves deciding which assets to invest in to
create wealth in the future?
ANS Investments
12.What is the main goal of a firm?
ANS To maximize owner wealth
13.What are financial managers doing if they evaluate whether it is worth
spending money on research and development for a new product?
,ANS Making an investment decision
14.Which type of financial market is where securities such as stocks and
bonds are traded after their initial issuance?
ANS The secondary financial market
15.What type of financial institution is an insurance company?
ANS Contractual
16.Which financial institution invests funds contributed by a company
to provide retirement funds for the company's employees?
ANS Pension fund
17.Personal income is which type of economic indicator?
ANS Coincident
18.Which term refers to something that conforms with accepted standards
of conduct that guide a person's behavior?
ANS Ethical
19.What is the second step in finding a solution to an ethical dilemma?
ANS Con- sider alternative courses of action
, 20.Which type of interest rate includes interest on interest in addition
to interest on the principal?
ANS Compound interest
21.How can agency problems be reduced through corporate control?
ANS Execu- tive compensation
22.What is the rate at which the average price level of particular goods
and services in an economy increases over a period of time?
ANS Inflation rate
23.You signed an apartment contract today. You are going to pay $1,500 at
the beginning of each month for the next 12 months, starting today. What
type of cash flows is this contract?
ANS An annuity due
24.What is the term for the return over the entire period that an investor
owns a financial security?
ANS Holding period return
25.What is used to measure total risk?
ANS Standard deviation
26.What is the term for the risk that changes in interest rates will impact
the value of a bond?
