WGU C214 Objective Assessment Financial Management Exam Questions With Correct Answers Newest Update (2024/2025) ||Complete A+ Guide

WGU C214 Objective Assessment Financial Management Exam

Questions With Correct Answers Newest Update (2024/2025)

||Complete A+ Guide




1. Characteristics of preferred stock includes
m m m m




…Ans>> -dividends in arrears
m m m




-dividends are cumulative
m m




-higher payoff claim in a BK (has first dibs in a BK)
m m m m m m m m m m m




-considered "hybrid" (part stock/part bond)
m m m m




-no fixed maturity date
m m m




-no voting rights
m m




-can skip dividend payments
m m m



1 m/ m11

,-dividends don't change year-after-year
m m m




-used in start ups (IPO)
m m m m




2. Preferred m stock dividends m




…Ans>> can go without payment and pay in arrears thefollowing year
mm m m m m m m m m m m




3. Characteristics of common stock are
m m m m




…Ans>> -voting rights mm m




-no maturity date
m m




-corporate governance m




-lower payoff claim in BK
m m m m




-variable returns m




-unlimited earnings potential
m m




-earnings are in dividends & the increase in price of stock
m m m m m m m m m m




4. New start up ventures often issue
m m m m m




…Ans>> preferred stock (in an IPO)
mm m m m m

2 m/ m11

,5. What m stock is considered a hybrid
m m m m




…Ans>> preferred stock mm m




6. One thing common stock and preferred stock have in common is
m m m m m m m m m m




…Ans>> both haveno maturity date
m m m m m




7. Which mtype of security has voting rights
m m m m m




…Ans>> common stock mm m




8. Debt covenants and restrictions help to ensure that
m m m m m m m




…Ans>> management is meetingbond and shareholder expectations
mm m m m m m m




NOTE: covenants are promises meant to be kept
m m m m m m m




9. What is true regarding bonds
m m m m




…Ans>> -when bond matures, bondholder gets lump sumback
mm m m m m m m m




3 m/ m11

, -coupon rate doesn't change
m m m




-maturity is in years m m m




-PAR value is typically $1000
m m m m




-Future value (same as PAR) is typically $1000
m m m m m m m




10. Bond sells at face value when
m m m m m




…Ans>> required rate of return is equal to the couponrate
mm m m m m m m m m m




11. Why are bonds the primary method for raising capital
m m m m m m m m




…Ans>> because bondsremove the intermediary costs
m m m m m m




NOTE: IPO's require an intermediary known as a syndicate - a group of
m m m m m m m m m m m m




m banksunderwriting the security issue
m m m m




12. What m type of bond can be traded for stock
m m m m m m m




…Ans>> convertible bonds mm m




4 m/ m11