WGU C214 QUESTIONS WITH CORRECT
ANSWERS 2025
CorporateQFinanceQ-QCORRECTQANSWERQ-focusesQonQfinancialQdecisionQmakingQbyQaQfirmsQmanagement
InvestmentsQ-QCORRECTQANSWERQ-variousQtypesQofQfinancialQinstrumentsQ(stocks,Qbonds,Qetc)
BankingQorQFinancialQInstitutionsQ-QCORRECTQANSWERQ-
makeQmoneyQbyQpayingQdepositorsQaQsmallerQinterestQrateQthanQtheQinterestQrateQchargedQtoQborrowers
TreasuryQSecuritiesQ-QCORRECTQANSWERQ-generallyQbondsQthatQareQissuedQbyQtheQUSQgovernment
CorporateQBondsQ-QCORRECTQANSWERQ-firmsQborrowingQfromQtheQpublic
StocksQ-QCORRECTQANSWERQ-aQshareQofQownershipQinQaQcompany
PrimaryQfinancialQmarketsQ-QCORRECTQANSWERQ-marketsQwhereQsecuritiesQareQfirstQissued
SyndicateQ-QCORRECTQANSWERQ-
aQgroupQthatQisQtemporarilyQformedQtoQhandleQaQbondQorQstockQissue:QgenerallyQlargeQinvestmentQbankQo
rQinstitutionalQinvestors
UnderwriterQ-QCORRECTQANSWERQ-
responsibleQforQdeterminingQtheQvalueQofQtheQsecurity;QmayQpurchaseQallQtheQsecuritiesQ&QthenQresaleQto
Qinvestors
CompetitiveQsaleQ-QCORRECTQANSWERQ-
underwritersQsubmitQbidsQofferingQhighestQprice/lowestQinterestQrate;QunderwriterQresalesQaQslightlyQhigh
erQprice
NegotiatedQsaleQ-QCORRECTQANSWERQ-underwritersQsubmitQbids,QgoQthruQinterviewQtoQbeQselected
,SecondaryQfinancialQmarketsQ-QCORRECTQANSWERQ-
whereQsecuritiesQareQtradedQafterQtheQinitialQofferingQ(stockQmarket)
AuctionQmarketQ-QCORRECTQANSWERQ-
hasQaQphysicalQlocationQ&QpricesQareQdeterminedQbyQtheQhighestQpriceQanQinvestorQisQwillingQtoQpayQ(New
QYorkQStockQExchange)
DealerQmarketQ-QCORRECTQANSWERQ-noQphysicalQlocation-
QsecuritiesQareQboughtQ&QsoldQthruQaQnetworkQofQdealersQthatQtradeQforQthemselves;QmultiQdealersQperQst
ockQ(NASDAQ)
RoleQofQfinancialQmarketsQ-QCORRECTQANSWERQ-
theyQreduceQtheQcostQofQborrowingQfromQtheQpublicQorQsellingQownershipQtoQtheQpublic
RoleQofQSpecialistQ(NYSE)QorQDealersQ-QCORRECTQANSWERQ-
provideQliquidityQforQaQfairQ&QorderlyQmarket;QmayQincreaseQtheQspreadQtoQdoQsoQ(chargeQaQlowerQpriceQt
oQsellerQandQaQhigherQpriceQtoQbuyer)
FinancialQmarketQliquidityQ-QCORRECTQANSWERQ-
theQeaseQofQtradingQinQtheQmarketQ(highQfrquencyQtraders)
MarketQordersQ-QCORRECTQANSWERQ-
timeQsensitive;QsalesQatQcurrentQbidQprice/buysQatQcurrentQaskingQpriceQwhenQorderQisQplaced-
immediately
LimitedQordersQ-QCORRECTQANSWERQ-
priceQsensitive;QsellQoccursQwhenQpriceQofQstockQmatchesQorderQprice
RoleQofQpriceQ-QCORRECTQANSWERQ-
convetQinformationQtoQconsumers;QaffectQincentivesQ&affectQtheQdistributionQofQincome
DollarQReturnsQ-QCORRECTQANSWERQ-PtQ-QPt-1Q+QCFtQ(Pt=QsoldQprice,QPt-1=boughtQprice,QCFt=cashQflow-
couponsQforQbonds/dividiansQforQstocks)
, PercentageQReturnsQ-QCORRECTQANSWERQ-PtQ-QPt-1/Pt-1Q+QCFt/Pt-1QxQ100Q(1.2)
(figureQforQdollarQreturnQandQdivideQintoQboughtQprice)
Q
GoalQofQcompany/firmQ-QCORRECTQANSWERQ-toQmaximizeQshareholderQvalueQorQmaximizeQprofit
AgencyQcostsQ-QCORRECTQANSWERQ-
costsQthatQareQincurredQwhenQmanagementQdoesn'tQactQinQtheQbestQinterestsQofQshareholders
ProfitQmaximizarionQ-QCORRECTQANSWERQ-theQpotentialQeffectQofQfocusingQsoleyQonQprofits
AccountingQ-QCORRECTQANSWERQ-isQbackward-lookingQandQriskQfree
FinanceQ-QCORRECTQANSWERQ-isQforward-lookingQandQinvolesQmassiveQuncertainty
IncomeQStatementQ-QCORRECTQANSWERQ-showQresultsQofQoperationQoverQtime;QrevenuesQ-
QexpensesQ=QnetQincome
BalanceQSheetQ-QCORRECTQANSWERQ-
aQ"snapQshot"QofQaQfirm'sQassestsQ&QfinancingQatQaQpaticularQpointQinQtime;QAssets=QLiabilitiesQ+QOwner'sQ
Equity
StatementQofQCashQFlowsQ-QCORRECTQANSWERQ-tracksQallQcashQinQandQoutQofQtheQfirm
CashQAccountingQ-QCORRECTQANSWERQ-cashQinQ=revenue;QcashQout=expense
AccrualQAccountingQ-QCORRECTQANSWERQ-
revenuesQareQrecognizedQwhenQtheQearningsQprocessQisQcomplete;QexpensesQareQ"matched"QtoQrecongize
dQrevenues
Cash-basedQincomeQ-QCORRECTQANSWERQ-anQinformalQmetricQbasedQonQcashQinQ&QcashQoutQofQtheQfirm
ANSWERS 2025
CorporateQFinanceQ-QCORRECTQANSWERQ-focusesQonQfinancialQdecisionQmakingQbyQaQfirmsQmanagement
InvestmentsQ-QCORRECTQANSWERQ-variousQtypesQofQfinancialQinstrumentsQ(stocks,Qbonds,Qetc)
BankingQorQFinancialQInstitutionsQ-QCORRECTQANSWERQ-
makeQmoneyQbyQpayingQdepositorsQaQsmallerQinterestQrateQthanQtheQinterestQrateQchargedQtoQborrowers
TreasuryQSecuritiesQ-QCORRECTQANSWERQ-generallyQbondsQthatQareQissuedQbyQtheQUSQgovernment
CorporateQBondsQ-QCORRECTQANSWERQ-firmsQborrowingQfromQtheQpublic
StocksQ-QCORRECTQANSWERQ-aQshareQofQownershipQinQaQcompany
PrimaryQfinancialQmarketsQ-QCORRECTQANSWERQ-marketsQwhereQsecuritiesQareQfirstQissued
SyndicateQ-QCORRECTQANSWERQ-
aQgroupQthatQisQtemporarilyQformedQtoQhandleQaQbondQorQstockQissue:QgenerallyQlargeQinvestmentQbankQo
rQinstitutionalQinvestors
UnderwriterQ-QCORRECTQANSWERQ-
responsibleQforQdeterminingQtheQvalueQofQtheQsecurity;QmayQpurchaseQallQtheQsecuritiesQ&QthenQresaleQto
Qinvestors
CompetitiveQsaleQ-QCORRECTQANSWERQ-
underwritersQsubmitQbidsQofferingQhighestQprice/lowestQinterestQrate;QunderwriterQresalesQaQslightlyQhigh
erQprice
NegotiatedQsaleQ-QCORRECTQANSWERQ-underwritersQsubmitQbids,QgoQthruQinterviewQtoQbeQselected
,SecondaryQfinancialQmarketsQ-QCORRECTQANSWERQ-
whereQsecuritiesQareQtradedQafterQtheQinitialQofferingQ(stockQmarket)
AuctionQmarketQ-QCORRECTQANSWERQ-
hasQaQphysicalQlocationQ&QpricesQareQdeterminedQbyQtheQhighestQpriceQanQinvestorQisQwillingQtoQpayQ(New
QYorkQStockQExchange)
DealerQmarketQ-QCORRECTQANSWERQ-noQphysicalQlocation-
QsecuritiesQareQboughtQ&QsoldQthruQaQnetworkQofQdealersQthatQtradeQforQthemselves;QmultiQdealersQperQst
ockQ(NASDAQ)
RoleQofQfinancialQmarketsQ-QCORRECTQANSWERQ-
theyQreduceQtheQcostQofQborrowingQfromQtheQpublicQorQsellingQownershipQtoQtheQpublic
RoleQofQSpecialistQ(NYSE)QorQDealersQ-QCORRECTQANSWERQ-
provideQliquidityQforQaQfairQ&QorderlyQmarket;QmayQincreaseQtheQspreadQtoQdoQsoQ(chargeQaQlowerQpriceQt
oQsellerQandQaQhigherQpriceQtoQbuyer)
FinancialQmarketQliquidityQ-QCORRECTQANSWERQ-
theQeaseQofQtradingQinQtheQmarketQ(highQfrquencyQtraders)
MarketQordersQ-QCORRECTQANSWERQ-
timeQsensitive;QsalesQatQcurrentQbidQprice/buysQatQcurrentQaskingQpriceQwhenQorderQisQplaced-
immediately
LimitedQordersQ-QCORRECTQANSWERQ-
priceQsensitive;QsellQoccursQwhenQpriceQofQstockQmatchesQorderQprice
RoleQofQpriceQ-QCORRECTQANSWERQ-
convetQinformationQtoQconsumers;QaffectQincentivesQ&affectQtheQdistributionQofQincome
DollarQReturnsQ-QCORRECTQANSWERQ-PtQ-QPt-1Q+QCFtQ(Pt=QsoldQprice,QPt-1=boughtQprice,QCFt=cashQflow-
couponsQforQbonds/dividiansQforQstocks)
, PercentageQReturnsQ-QCORRECTQANSWERQ-PtQ-QPt-1/Pt-1Q+QCFt/Pt-1QxQ100Q(1.2)
(figureQforQdollarQreturnQandQdivideQintoQboughtQprice)
Q
GoalQofQcompany/firmQ-QCORRECTQANSWERQ-toQmaximizeQshareholderQvalueQorQmaximizeQprofit
AgencyQcostsQ-QCORRECTQANSWERQ-
costsQthatQareQincurredQwhenQmanagementQdoesn'tQactQinQtheQbestQinterestsQofQshareholders
ProfitQmaximizarionQ-QCORRECTQANSWERQ-theQpotentialQeffectQofQfocusingQsoleyQonQprofits
AccountingQ-QCORRECTQANSWERQ-isQbackward-lookingQandQriskQfree
FinanceQ-QCORRECTQANSWERQ-isQforward-lookingQandQinvolesQmassiveQuncertainty
IncomeQStatementQ-QCORRECTQANSWERQ-showQresultsQofQoperationQoverQtime;QrevenuesQ-
QexpensesQ=QnetQincome
BalanceQSheetQ-QCORRECTQANSWERQ-
aQ"snapQshot"QofQaQfirm'sQassestsQ&QfinancingQatQaQpaticularQpointQinQtime;QAssets=QLiabilitiesQ+QOwner'sQ
Equity
StatementQofQCashQFlowsQ-QCORRECTQANSWERQ-tracksQallQcashQinQandQoutQofQtheQfirm
CashQAccountingQ-QCORRECTQANSWERQ-cashQinQ=revenue;QcashQout=expense
AccrualQAccountingQ-QCORRECTQANSWERQ-
revenuesQareQrecognizedQwhenQtheQearningsQprocessQisQcomplete;QexpensesQareQ"matched"QtoQrecongize
dQrevenues
Cash-basedQincomeQ-QCORRECTQANSWERQ-anQinformalQmetricQbasedQonQcashQinQ&QcashQoutQofQtheQfirm
