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WGU C214 Financial Management OA QUESTIONS
AND ANSWERS ALREADY GRADED A+||Verified
Exam!!!|| 100% Verified Solutions | Updated Per Latest
Guidelines || Graded A+
If a company wishes to obtain a bank loan, will it want to
have a higher current ratio or a lower current ratio? -
Answer-Higher
The Operating Income Return on Investment (OIROI) uses
what elements on the income statement? - Answer-EBIT
and total assets
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Why would a company be interested in the Total Asset
Turnover (TAT) ratio? - Answer-To see how efficient are at
producing sales
What annual interest will be paid for a zero coupon bond?
- Answer-0%
What is the most significant characteristic of subordinated
debt? - Answer-Senior debt is paid off first
If a company wants to increase its debt capital, how will
they raise the funds? - Answer-Sell bonds
What is the lowest level investment bond - Answer-BBB
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What can cause the bond price to fluctuate? - Answer-A
change in the bond rating, a change in the financial
condition, general change in interest rates.
What does a company use as security for a bond? -
Answer-Credit worthiness
Under the efficient market hypothesis, what will companies
endeavor to do? - Answer-Maximize profits for a given
level of risk
What does the beta coefficient represent? - Answer-It is a
statistically derived measure of volatility.
If an investor knows the idiosyncratic risk, the investor
knows the? - Answer-Beta Coefficient
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Why is the depreciation expense taken out of the net
income calculation, yet added back at the end? - Answer-
Because depreciation expense is tax deductible.
Why would we reject a project based on NPV? - Answer-
The NPV is a negative number
Why would we reject a project based on IRR? - Answer-
The discount rate is higher than the IRR
What are two key elements of differential cash flow? -
Answer-Depreciation expense and net income
Why is the NPV preferred over the IRR? - Answer-It
measures the dollar value and is more reliable.
WGU C214 Financial Management OA QUESTIONS
AND ANSWERS ALREADY GRADED A+||Verified
Exam!!!|| 100% Verified Solutions | Updated Per Latest
Guidelines || Graded A+
If a company wishes to obtain a bank loan, will it want to
have a higher current ratio or a lower current ratio? -
Answer-Higher
The Operating Income Return on Investment (OIROI) uses
what elements on the income statement? - Answer-EBIT
and total assets
,2|Page
Why would a company be interested in the Total Asset
Turnover (TAT) ratio? - Answer-To see how efficient are at
producing sales
What annual interest will be paid for a zero coupon bond?
- Answer-0%
What is the most significant characteristic of subordinated
debt? - Answer-Senior debt is paid off first
If a company wants to increase its debt capital, how will
they raise the funds? - Answer-Sell bonds
What is the lowest level investment bond - Answer-BBB
,3|Page
What can cause the bond price to fluctuate? - Answer-A
change in the bond rating, a change in the financial
condition, general change in interest rates.
What does a company use as security for a bond? -
Answer-Credit worthiness
Under the efficient market hypothesis, what will companies
endeavor to do? - Answer-Maximize profits for a given
level of risk
What does the beta coefficient represent? - Answer-It is a
statistically derived measure of volatility.
If an investor knows the idiosyncratic risk, the investor
knows the? - Answer-Beta Coefficient
, 4|Page
Why is the depreciation expense taken out of the net
income calculation, yet added back at the end? - Answer-
Because depreciation expense is tax deductible.
Why would we reject a project based on NPV? - Answer-
The NPV is a negative number
Why would we reject a project based on IRR? - Answer-
The discount rate is higher than the IRR
What are two key elements of differential cash flow? -
Answer-Depreciation expense and net income
Why is the NPV preferred over the IRR? - Answer-It
measures the dollar value and is more reliable.
