WGU D076 FINANCE SKILLS FOR
MANAGERS UPDATED EXAM QUESTIONS
AND CORRECT ANSWERS
●● Holding Period Return
Answer: Return over the entire period that an investor owns a financial
security
●● Beta
Answer: A measure of the volatility, or systematic risk, of a security or a
portfolio in comparison to the market as a whole.
●● standard deviation
Answer: Used to measure the total risk of securities
●● annuity due
Answer: an annuity whose payments occur at the beginning of each
period, consecutively
●● Par Bond
Answer: When the bond's coupon rate equals the market yield;
Bonds are typically issued near par value
, ●● Pi
Answer: Profitability index. At 1, the PI means a internal return rate
equal to the cost of capital
●● Irr
Answer: Internal rate of return (IRR) is a discount rate at which the net
present value (NPV) of an investment is equal to zero.
If the IRR is higher than the cost of borrowing to fund the investment,
the investment should be profitable. Always shown as percentage.
●● Net Present Value (NPV)
Answer: A method of ranking investment proposals using the NPV,
which is equal to the present value of the project's free cash flows
discounted at the cost of capital. Shown as dollar amount.. At $0 it
means it will neither add nor subtract value.
●● Inventory Turnover
Answer: An activity ratio found by COGS divided by inventory
●● dividends in arrears
Answer: Feature of preferred stock specifying that if a company ignores
preferred stock dividends it cannot pay anything to it's common
stockholders
MANAGERS UPDATED EXAM QUESTIONS
AND CORRECT ANSWERS
●● Holding Period Return
Answer: Return over the entire period that an investor owns a financial
security
●● Beta
Answer: A measure of the volatility, or systematic risk, of a security or a
portfolio in comparison to the market as a whole.
●● standard deviation
Answer: Used to measure the total risk of securities
●● annuity due
Answer: an annuity whose payments occur at the beginning of each
period, consecutively
●● Par Bond
Answer: When the bond's coupon rate equals the market yield;
Bonds are typically issued near par value
, ●● Pi
Answer: Profitability index. At 1, the PI means a internal return rate
equal to the cost of capital
●● Irr
Answer: Internal rate of return (IRR) is a discount rate at which the net
present value (NPV) of an investment is equal to zero.
If the IRR is higher than the cost of borrowing to fund the investment,
the investment should be profitable. Always shown as percentage.
●● Net Present Value (NPV)
Answer: A method of ranking investment proposals using the NPV,
which is equal to the present value of the project's free cash flows
discounted at the cost of capital. Shown as dollar amount.. At $0 it
means it will neither add nor subtract value.
●● Inventory Turnover
Answer: An activity ratio found by COGS divided by inventory
●● dividends in arrears
Answer: Feature of preferred stock specifying that if a company ignores
preferred stock dividends it cannot pay anything to it's common
stockholders
