WGU D775 Practice Set For Exam Questions with
100% Correct Answers
Which principle guides business finance to optimize
resource use? Correct Answer: Risk-return trade-off —
Finance balances risk and expected return.
Which activity describes capital raising in business
finance? Correct Answer: Securing funding for business
operations and projects — Capital raising means
obtaining money for operations/investments.
Which finance activity involves the creation, circulation,
and management of money? Correct Answer: Setting
monetary policy — Managed by central banks.
What is common stock? Correct Answer: A share of
ownership in a firm with voting rights.
What is a characteristic of preferred stock? Correct
Answer: Fixed dividends — They pay stated dividend
amounts.
,What is the purpose of bonds from the issuer's
perspective? Correct Answer: To raise capital without
diluting ownership — Bonds are debt.
Which type of bonds are considered junk bonds?
Correct Answer: Speculative bonds — Below investment
grade.
Which type of investment vehicle is uniquely used for
retirement savings? Correct Answer: 401(k) plans — Tax-
advantaged retirement plan.
What is true about options in financial derivatives?
Correct Answer: They give the buyer the right, but not
the obligation, to buy or sell an asset.
How do funds benefit from economies of scale? Correct
Answer: Making large-scale investments that reduce
transaction costs.
What is an initial public offering (IPO)? Correct Answer:
The first sale of a company's stock to the public.
, What is an example of a secondary market activity?
Correct Answer: Trading of stocks on the New York Stock
Exchange.
What are the two main types of financial markets?
Correct Answer: Primary markets and secondary
markets.
What is a role of financial regulators? Correct Answer:
Ensuring fair and transparent markets.
What are depository institutions? Correct Answer:
Institutions that accept deposits and provide loans.
What is the primary source of revenue for depository
institutions? Correct Answer: Interest income from loans.
How does rising CPI affect businesses? Correct Answer:
Increased costs for raw materials and labor.
How can companies demonstrate CSR commitment?
Correct Answer: Supporting education and healthcare
initiatives.
100% Correct Answers
Which principle guides business finance to optimize
resource use? Correct Answer: Risk-return trade-off —
Finance balances risk and expected return.
Which activity describes capital raising in business
finance? Correct Answer: Securing funding for business
operations and projects — Capital raising means
obtaining money for operations/investments.
Which finance activity involves the creation, circulation,
and management of money? Correct Answer: Setting
monetary policy — Managed by central banks.
What is common stock? Correct Answer: A share of
ownership in a firm with voting rights.
What is a characteristic of preferred stock? Correct
Answer: Fixed dividends — They pay stated dividend
amounts.
,What is the purpose of bonds from the issuer's
perspective? Correct Answer: To raise capital without
diluting ownership — Bonds are debt.
Which type of bonds are considered junk bonds?
Correct Answer: Speculative bonds — Below investment
grade.
Which type of investment vehicle is uniquely used for
retirement savings? Correct Answer: 401(k) plans — Tax-
advantaged retirement plan.
What is true about options in financial derivatives?
Correct Answer: They give the buyer the right, but not
the obligation, to buy or sell an asset.
How do funds benefit from economies of scale? Correct
Answer: Making large-scale investments that reduce
transaction costs.
What is an initial public offering (IPO)? Correct Answer:
The first sale of a company's stock to the public.
, What is an example of a secondary market activity?
Correct Answer: Trading of stocks on the New York Stock
Exchange.
What are the two main types of financial markets?
Correct Answer: Primary markets and secondary
markets.
What is a role of financial regulators? Correct Answer:
Ensuring fair and transparent markets.
What are depository institutions? Correct Answer:
Institutions that accept deposits and provide loans.
What is the primary source of revenue for depository
institutions? Correct Answer: Interest income from loans.
How does rising CPI affect businesses? Correct Answer:
Increased costs for raw materials and labor.
How can companies demonstrate CSR commitment?
Correct Answer: Supporting education and healthcare
initiatives.
