WGU C214 Financial Management Pre-Assessment
questions with verified answers
A bond pays $27.50 semiannually, matures in 9 years, and is currently priced at
$1,090.
What is the yield to maturity for this bond? Ans✓✓✓ 4.28%
A bond that matures in 30 months is sold at a premium.
What is the yield to maturity (YTM)? Ans✓✓✓ Lower than the coupon rate
A broker is considering buying a dividend-paying stock. The dividend will be paid
atthe end of the year.
The analyst consensus is the stock will be worth $36 in one year. The company
pays a $2.25 annual
dividend (ex dividend date is not a consideration,the broker will receive the full
$2.25), and the broker
expects a 12% rate of return
What is the highest price the broker should be willing to pay for the stock?
Ans✓✓✓ $34.15
A broker is considering purchasing common stock in a company that has average
but consistent operating
performance.
, Which factor should lead the broker to purchase shares in this company?
Ans✓✓✓ The current price of the stock is 25% below its intrinsic value.
A company has a before-tax cost of common equity of 14%, a pre-tax cost of debt
6%, a cost of preferred
equity 8%, and a marginaltax rate of 34%. The current market value ofthe
company is $150 million, with
$75 million common equity, $50 million debt, and $25 million preferred equity.
What is the company's weighted average cost of capital? Ans✓✓✓ 9.7%
A company has a market value of $500 million.
It has a market value of equity of $200 million, a market value of long-term debt
of $150 million, and a
market value of short-term debt of $150 million.
The cost of equity is 12%,the cost of long-term debtis 8%, and the cost of short-
term debtis 6%. The
marginal tax rate is 35%.
What is the weighted average pre-tax cost of capital (WACC) for this company?
Ans✓✓✓ 9.00%
A company issues bonds at a market price of $925. The face value is $1,000. The
bonds mature in 10 years,
and the coupon rate is 6% compounded semiannually.
questions with verified answers
A bond pays $27.50 semiannually, matures in 9 years, and is currently priced at
$1,090.
What is the yield to maturity for this bond? Ans✓✓✓ 4.28%
A bond that matures in 30 months is sold at a premium.
What is the yield to maturity (YTM)? Ans✓✓✓ Lower than the coupon rate
A broker is considering buying a dividend-paying stock. The dividend will be paid
atthe end of the year.
The analyst consensus is the stock will be worth $36 in one year. The company
pays a $2.25 annual
dividend (ex dividend date is not a consideration,the broker will receive the full
$2.25), and the broker
expects a 12% rate of return
What is the highest price the broker should be willing to pay for the stock?
Ans✓✓✓ $34.15
A broker is considering purchasing common stock in a company that has average
but consistent operating
performance.
, Which factor should lead the broker to purchase shares in this company?
Ans✓✓✓ The current price of the stock is 25% below its intrinsic value.
A company has a before-tax cost of common equity of 14%, a pre-tax cost of debt
6%, a cost of preferred
equity 8%, and a marginaltax rate of 34%. The current market value ofthe
company is $150 million, with
$75 million common equity, $50 million debt, and $25 million preferred equity.
What is the company's weighted average cost of capital? Ans✓✓✓ 9.7%
A company has a market value of $500 million.
It has a market value of equity of $200 million, a market value of long-term debt
of $150 million, and a
market value of short-term debt of $150 million.
The cost of equity is 12%,the cost of long-term debtis 8%, and the cost of short-
term debtis 6%. The
marginal tax rate is 35%.
What is the weighted average pre-tax cost of capital (WACC) for this company?
Ans✓✓✓ 9.00%
A company issues bonds at a market price of $925. The face value is $1,000. The
bonds mature in 10 years,
and the coupon rate is 6% compounded semiannually.
