WGU C214 OA FINANCIAL MANAGEMENT
EXAMINATION TEST 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ Cost of Equity. Answer: How much it costs a firm (in percentage
terms) to use equity financing. From the investor's perspective, it is what
they require given the riskiness/opportunity cost of the company. From
the companies perspective, it is the same rate, but it is what it "costs" to
attract those potential investors. It is the return they must give investors
for them to invest with their company.
◉ American Depository Receipts (ADRs). Answer: Certificates issued
by U.S. banks and traded on U.S. markets but represent shares of foreign
stocks
◉ Degree of Operating Leverage (DOL). Answer: Business risk
examines the %change in operating cash flow relative to the %change in
quantity sold
◉ Degree of Financial Leverage (DFL). Answer: Financial Risk
examines %change earnings per share relative to %change in OI (EBIT)
, ◉ National Banking Act of 1863. Answer: Federal regulation to deal
with "wildcat banking" (state-mandated remote and inaccessible banks
not federally regulated)
◉ Federal Reserve Act of 1913. Answer: Federal regulation to deal with
bank runs and recessions; gave the 12 Federal Reserve banks the ability
to print money to ensure economic stability. The Federal Reserve
System created the dual mandate to maximize employment and keep
inflation low.
◉ Form S-1. Answer: Original prospectus (registration statement) filed
with the SEC by firms prior to the sale of new securities to the public.
◉ Net Present Value (NPV). Answer: Capital budgeting with TVM to
analyze the projected profitability. Difference between the present value
of cash inflows and the present value of cash outflows over a period of
time.
◉ Internal Rate of Return (IRR). Answer: Capital budgeting with TVM
to evaluate the attractiveness of a project or investment. The discount
rate that forces a project's NPV to equal zero.
◉ Sarbanes-Oxley Act of 2002. Answer: Federal regulations resulting
from corporate frauds such as Enron and designed to protect investors
from fraud.
EXAMINATION TEST 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ Cost of Equity. Answer: How much it costs a firm (in percentage
terms) to use equity financing. From the investor's perspective, it is what
they require given the riskiness/opportunity cost of the company. From
the companies perspective, it is the same rate, but it is what it "costs" to
attract those potential investors. It is the return they must give investors
for them to invest with their company.
◉ American Depository Receipts (ADRs). Answer: Certificates issued
by U.S. banks and traded on U.S. markets but represent shares of foreign
stocks
◉ Degree of Operating Leverage (DOL). Answer: Business risk
examines the %change in operating cash flow relative to the %change in
quantity sold
◉ Degree of Financial Leverage (DFL). Answer: Financial Risk
examines %change earnings per share relative to %change in OI (EBIT)
, ◉ National Banking Act of 1863. Answer: Federal regulation to deal
with "wildcat banking" (state-mandated remote and inaccessible banks
not federally regulated)
◉ Federal Reserve Act of 1913. Answer: Federal regulation to deal with
bank runs and recessions; gave the 12 Federal Reserve banks the ability
to print money to ensure economic stability. The Federal Reserve
System created the dual mandate to maximize employment and keep
inflation low.
◉ Form S-1. Answer: Original prospectus (registration statement) filed
with the SEC by firms prior to the sale of new securities to the public.
◉ Net Present Value (NPV). Answer: Capital budgeting with TVM to
analyze the projected profitability. Difference between the present value
of cash inflows and the present value of cash outflows over a period of
time.
◉ Internal Rate of Return (IRR). Answer: Capital budgeting with TVM
to evaluate the attractiveness of a project or investment. The discount
rate that forces a project's NPV to equal zero.
◉ Sarbanes-Oxley Act of 2002. Answer: Federal regulations resulting
from corporate frauds such as Enron and designed to protect investors
from fraud.
