WGU D076 CERTIFICATION SCRIPT 2026
QUESTIONS WITH SOLUTIONS GRADED A+
◍ Capital-Constrained environment.
Answer: when a limited amount of funds are available
◍ Gordon Growth Model.
Answer: A formula used to value common stock based on the assumptions
that dividends are paid every year and grow at constant rate forever.
◍ Accounts Receivable Turnover (AR Turnover).
Answer: An activity ratio found by credit sales divided by accounts
receivable.credit sales/accounts receivable
◍ Cross-sectional Analysis.
Answer: Comparing a firm's financial ratios to other firms' ratios or industry
averages.
◍ Current Ratio.
Answer: A liquidity ratio found by current assets divided by current
liabilities, current assets/current liabilities
◍ Market Risk.
Answer: Risk that is inherent in the economy as a whole and cannot be
diversified away; also called systematic risk or nondiversifiable risk.
◍ Maturity Date.
Answer: The date at which a bond expires.
◍ Gross Margin.
Answer: A profitability ratio found by gross profit divided by sales.
◍ Agency Problem.
Answer: When the agent (the management) does not act in the best interest
, of the principal (the owners)
◍ Capital Structure.
Answer: The mixture of debt and equity used to finance a firm.
◍ U.S Treasuries.
Answer: Bonds, bills, and notes issued by the U.S. government; considered
to be the highest-quality securities available.
◍ Debt ratio.
Answer: A financing ratio found by total liabilities divided by total equity.
Liabilities/total equity.
◍ Activity Ratios.
Answer: A category of ratios that measure how well a company uses its
assets to generate sales or cash, showing the firm's operational efficiency
and profitability.
◍ Leverage Ratios.
Answer: A category of ratios that consider how a firm is financed.
◍ Agency Costs.
Answer: Costs that are incurred when management does not act in the best
interest of shareholders
◍ Hybrid Security.
Answer: A security that has some elements that resemble equity and others
that resemble debt.
◍ Required Rate of Return.
Answer: The minimum return or compensation an investor requires in order
to invest; see interest rate.
◍ Investments.
Answer: An area of finance that involves deciding which assets to invest in
to create wealth in the future.
◍ Money Market.
Answer: A type of financial market used for short-term assets that are held
, for less than one year.
◍ Privately Held Companies.
Answer: Firms that have not issued shares to the public where the ownership
rights are privately held.
◍ Capital Markets.
Answer: A type of financial market used for long-term assets that are held
for greater that one year.
◍ Capital Asset Pricing Model (CAPM).
Answer: A model used to determine the required return on an asset.
◍ Treasury Securities.
Answer: A debt instrument (bond) that is issued by the United States
government in order to raise capital.
◍ Perpetuity.
Answer: A constant stream of identical cash flows that continues forever.
◍ Mutually Exclusive.
Answer: When two or more events do not coincide.
◍ Return On Assets (ROA).
Answer: A profitability ratio found by net income divided by total assets.
◍ Holding Period Return.
Answer: The return over the entire period that an investor owns a financial
security.
◍ New York Stock Exchange (NYSE).
Answer: A physical trading floor and a computer network where stocks are
bought and sold. It is the largest stock exchange in the world.
◍ Liquidity.
Answer: The ability to turn financial securities into cash easily without
losing significant value.
◍ Banks and Credit Unions.
QUESTIONS WITH SOLUTIONS GRADED A+
◍ Capital-Constrained environment.
Answer: when a limited amount of funds are available
◍ Gordon Growth Model.
Answer: A formula used to value common stock based on the assumptions
that dividends are paid every year and grow at constant rate forever.
◍ Accounts Receivable Turnover (AR Turnover).
Answer: An activity ratio found by credit sales divided by accounts
receivable.credit sales/accounts receivable
◍ Cross-sectional Analysis.
Answer: Comparing a firm's financial ratios to other firms' ratios or industry
averages.
◍ Current Ratio.
Answer: A liquidity ratio found by current assets divided by current
liabilities, current assets/current liabilities
◍ Market Risk.
Answer: Risk that is inherent in the economy as a whole and cannot be
diversified away; also called systematic risk or nondiversifiable risk.
◍ Maturity Date.
Answer: The date at which a bond expires.
◍ Gross Margin.
Answer: A profitability ratio found by gross profit divided by sales.
◍ Agency Problem.
Answer: When the agent (the management) does not act in the best interest
, of the principal (the owners)
◍ Capital Structure.
Answer: The mixture of debt and equity used to finance a firm.
◍ U.S Treasuries.
Answer: Bonds, bills, and notes issued by the U.S. government; considered
to be the highest-quality securities available.
◍ Debt ratio.
Answer: A financing ratio found by total liabilities divided by total equity.
Liabilities/total equity.
◍ Activity Ratios.
Answer: A category of ratios that measure how well a company uses its
assets to generate sales or cash, showing the firm's operational efficiency
and profitability.
◍ Leverage Ratios.
Answer: A category of ratios that consider how a firm is financed.
◍ Agency Costs.
Answer: Costs that are incurred when management does not act in the best
interest of shareholders
◍ Hybrid Security.
Answer: A security that has some elements that resemble equity and others
that resemble debt.
◍ Required Rate of Return.
Answer: The minimum return or compensation an investor requires in order
to invest; see interest rate.
◍ Investments.
Answer: An area of finance that involves deciding which assets to invest in
to create wealth in the future.
◍ Money Market.
Answer: A type of financial market used for short-term assets that are held
, for less than one year.
◍ Privately Held Companies.
Answer: Firms that have not issued shares to the public where the ownership
rights are privately held.
◍ Capital Markets.
Answer: A type of financial market used for long-term assets that are held
for greater that one year.
◍ Capital Asset Pricing Model (CAPM).
Answer: A model used to determine the required return on an asset.
◍ Treasury Securities.
Answer: A debt instrument (bond) that is issued by the United States
government in order to raise capital.
◍ Perpetuity.
Answer: A constant stream of identical cash flows that continues forever.
◍ Mutually Exclusive.
Answer: When two or more events do not coincide.
◍ Return On Assets (ROA).
Answer: A profitability ratio found by net income divided by total assets.
◍ Holding Period Return.
Answer: The return over the entire period that an investor owns a financial
security.
◍ New York Stock Exchange (NYSE).
Answer: A physical trading floor and a computer network where stocks are
bought and sold. It is the largest stock exchange in the world.
◍ Liquidity.
Answer: The ability to turn financial securities into cash easily without
losing significant value.
◍ Banks and Credit Unions.
