WGU D775 PRACTICE SET FOR EXAM
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
Which principle guides business finance to optimize resource use? - ANS Risk-return trade-off
— Finance balances risk and expected return.
Which activity describes capital raising in business finance? - ANS Securing funding for
business operations and projects — Capital raising means obtaining money for
operations/investments.
Which finance activity involves the creation, circulation, and management of money? -
ANS Setting monetary policy — Managed by central banks.
What is common stock? - ANS A share of ownership in a firm with voting rights.
What is a characteristic of preferred stock? - ANS Fixed dividends — They pay stated dividend
amounts.
What is the purpose of bonds from the issuer's perspective? - ANS To raise capital without
diluting ownership — Bonds are debt.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Which type of bonds are considered junk bonds? - ANS Speculative bonds — Below
investment grade.
Which type of investment vehicle is uniquely used for retirement savings? - ANS 401(k) plans
— Tax-advantaged retirement plan.
What is true about options in financial derivatives? - ANS They give the buyer the right, but
not the obligation, to buy or sell an asset.
How do funds benefit from economies of scale? - ANS Making large-scale investments that
reduce transaction costs.
What is an initial public offering (IPO)? - ANS The first sale of a company's stock to the public.
What is an example of a secondary market activity? - ANS Trading of stocks on the New York
Stock Exchange.
What are the two main types of financial markets? - ANS Primary markets and secondary
markets.
What is a role of financial regulators? - ANS Ensuring fair and transparent markets.
What are depository institutions? - ANS Institutions that accept deposits and provide loans.
What is the primary source of revenue for depository institutions? - ANS Interest income
from loans.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND ANSWERS. VERIFIED
2025/2026.
Which principle guides business finance to optimize resource use? - ANS Risk-return trade-off
— Finance balances risk and expected return.
Which activity describes capital raising in business finance? - ANS Securing funding for
business operations and projects — Capital raising means obtaining money for
operations/investments.
Which finance activity involves the creation, circulation, and management of money? -
ANS Setting monetary policy — Managed by central banks.
What is common stock? - ANS A share of ownership in a firm with voting rights.
What is a characteristic of preferred stock? - ANS Fixed dividends — They pay stated dividend
amounts.
What is the purpose of bonds from the issuer's perspective? - ANS To raise capital without
diluting ownership — Bonds are debt.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Which type of bonds are considered junk bonds? - ANS Speculative bonds — Below
investment grade.
Which type of investment vehicle is uniquely used for retirement savings? - ANS 401(k) plans
— Tax-advantaged retirement plan.
What is true about options in financial derivatives? - ANS They give the buyer the right, but
not the obligation, to buy or sell an asset.
How do funds benefit from economies of scale? - ANS Making large-scale investments that
reduce transaction costs.
What is an initial public offering (IPO)? - ANS The first sale of a company's stock to the public.
What is an example of a secondary market activity? - ANS Trading of stocks on the New York
Stock Exchange.
What are the two main types of financial markets? - ANS Primary markets and secondary
markets.
What is a role of financial regulators? - ANS Ensuring fair and transparent markets.
What are depository institutions? - ANS Institutions that accept deposits and provide loans.
What is the primary source of revenue for depository institutions? - ANS Interest income
from loans.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
