WGU C214 FINAL EXAM ACTUAL QUESTIONS AND
ANSWERS RATED A+
✔✔What is the risk associated with debt financing? - ✔✔Too much debt can lead to
bankruptcy
✔✔What are inventory related costs? - ✔✔Product costs, storage costs, and opportunity
costs
✔✔What statements are required to be filed with the SEC - ✔✔Annual audited financial
statements
✔✔What are the issues with understanding foreign financial statements? - ✔✔Foreign
financial statements use international financial reporting standards and they are
different from US accounting standards
✔✔What does cash flow from investing activities measure? - ✔✔It measure investments
in long term assets such as building, equipment, and machinery
✔✔What does the efficient frontier measure? - ✔✔It maximizes expected return for a
given level of risk
✔✔What is the objective of portfolio diversification? - ✔✔The objective is to reduce risk
✔✔What is the definition of a current asset and current liability? - ✔✔A current asset is
cash or any other asset that can be converted to cash within 12 months and a current
liability is any liability that has to be paid within 12 months
✔✔What is a differential cash flow? - ✔✔It is the amount of net cash flow generated a
new asset on a yearly basis
✔✔What does the current ratio measure? - ✔✔It is a measure of short term liquidity to
pay short term obligations
✔✔How does credit rating impact cost of capital? - ✔✔A rating downgrade will increase
the cost of capital
✔✔What is one of the roles of the SEC? - ✔✔It regulates public disclosures of entities
that sell debt and equity to the public
✔✔What leads to an increase in APY? - ✔✔An increase in the frequency of
compounding - like going from annual to monthly compounding
✔✔What bonds are taxed at the federal level? - ✔✔Treasury bonds
ANSWERS RATED A+
✔✔What is the risk associated with debt financing? - ✔✔Too much debt can lead to
bankruptcy
✔✔What are inventory related costs? - ✔✔Product costs, storage costs, and opportunity
costs
✔✔What statements are required to be filed with the SEC - ✔✔Annual audited financial
statements
✔✔What are the issues with understanding foreign financial statements? - ✔✔Foreign
financial statements use international financial reporting standards and they are
different from US accounting standards
✔✔What does cash flow from investing activities measure? - ✔✔It measure investments
in long term assets such as building, equipment, and machinery
✔✔What does the efficient frontier measure? - ✔✔It maximizes expected return for a
given level of risk
✔✔What is the objective of portfolio diversification? - ✔✔The objective is to reduce risk
✔✔What is the definition of a current asset and current liability? - ✔✔A current asset is
cash or any other asset that can be converted to cash within 12 months and a current
liability is any liability that has to be paid within 12 months
✔✔What is a differential cash flow? - ✔✔It is the amount of net cash flow generated a
new asset on a yearly basis
✔✔What does the current ratio measure? - ✔✔It is a measure of short term liquidity to
pay short term obligations
✔✔How does credit rating impact cost of capital? - ✔✔A rating downgrade will increase
the cost of capital
✔✔What is one of the roles of the SEC? - ✔✔It regulates public disclosures of entities
that sell debt and equity to the public
✔✔What leads to an increase in APY? - ✔✔An increase in the frequency of
compounding - like going from annual to monthly compounding
✔✔What bonds are taxed at the federal level? - ✔✔Treasury bonds
