WGU D076- ALL UNIT TESTS COMBINED ACTUAL QUESTIONS AND ANSWERS NEW YEAR VERIFIED 100%
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Course
WGU D076
Institution
WGU D076
WGU D076- ALL UNIT TESTS COMBINED ACTUAL QUESTIONS AND ANSWERS NEW YEAR VERIFIED 100%
What are the main services offered by financial institutions?
Accepting a wide variety of deposits, offering investment products, providing loans, and brokering financial transactions
What is the main objecti...
WGU D076- ALL UNIT TESTS COMBINED ACTUAL
QUESTIONS AND ANSWERS NEW YEAR VERIFIED
100%
What are the main services offered by financial institutions?
Accepting a wide variety of deposits, offering investment products, providing loans,
and brokering financial transactions
What is the main objective of personal financial goals?
To maximize individual utility
Which task does the financial manager of a firm perform that involves the
issuance of new stocks and bonds?
Making financing decisions
Why is understanding the definition of finance important in managing personal
finances?
It helps individuals compare the costs and benefits of an action to determine whether
to take that action.
In which type of market would a company issue bonds or stocks for the first
time?
Primary market
Which type of financial institution is a mutual fund?
Investment institution
Which financial institution specializes in managing and administering
retirement funds?
Pension funds
Which type of economic indicator is the consumer price index?
Lagging indicator
What does the term ethical refer to?
The accepted standards of conduct that guide a person's behavior
A company's officers and board of directors are selling their stocks in the firm
at higher prices due to false accounting reports that made the stock seem
more valuable than it truly was. Which ethical issue is occurring in this
situation?
Agency problem due to conflicting interests
Which area of finance involves deciding which assets to invest in to create
wealth in the future?
Investments
What is the main goal of a firm?
To maximize owner wealth
What are financial managers doing if they evaluate whether it is worth
spending money on research and development for a new product?
Making an investment decision
Which type of financial market is where securities such as stocks and bonds
are traded after their initial issuance?
The secondary financial market
What type of financial institution is an insurance company?
Contractual
,Which financial institution invests funds contributed by a company to provide
retirement funds for the company's employees?
Pension fund
Personal income is which type of economic indicator?
Coincident
Which term refers to something that conforms with accepted standards of
conduct that guide a person's behavior?
Ethical
What is the second step in finding a solution to an ethical dilemma?
Consider alternative courses of action
Which type of interest rate includes interest on interest in addition to interest
on the principal?
Compound interest
How can agency problems be reduced through corporate control?
Executive compensation
What is the rate at which the average price level of particular goods and
services in an economy increases over a period of time?
Inflation rate
You signed an apartment contract today. You are going to pay $1,500 at the
beginning of each month for the next 12 months, starting today. What type of
cash flows is this contract?
An annuity due
What is the term for the return over the entire period that an investor owns a
financial security?
Holding period return
What is used to measure total risk?
Standard deviation
What is the term for the risk that changes in interest rates will impact the value
of a bond?
Interest rate risk
What is another name for the cost of capital?
Discount rate
What is the name for the minimum rate of return that an investor or lender will
accept for investments?
Required rate of return
The nominal interest rate of an investment is 8%, and the inflation rate is 3%.
What is the real interest rate?
5%
Which action reduces the future value of cash flows?
Receive all cash flows later than expected.
How is risk defined in finance?
The possibility that the realized or actual return will differ from what we expect
Which example below is considered a market risk factor?
An unexpected change in interest rate occurs.
Why are ratios useful for analyzing and comparing company performance
between firms of different sizes?
They provide standardization.
You are the financial manager of a firm. The firm is small and is struggling to
collect cash from accounts receivable. Also, due to the nature of industry,
inventories are illiquid. To make sure that the firm has enough cash holdings
, for short-term obligations, you decide to create a new ratio of cash to short-
term obligations. What is this scenario an example of?
Flexibility
Why are activity ratios also called efficiency ratios or asset use efficiency
ratios?
Because they measure how well a company uses its assets to generate sales or
cash.
What type of ratio is used to consider how a firm is financed and to assess a
firm's ability to pay interest and pay back long-term obligations?
Financing ratios
What does a net margin of 7% indicate?
For every dollar of revenue, 7 cents remain for the equity holders after all other costs
are covered.
Firm A has an average collection period of 67 days, and the industry norm is
40 days. What can the firm do in order to be competitive with accounts
receivable management in the industry?
Tighten the credit standards for its customers.
What is the difference between the current ratio and the quick ratio?
Inventory is excluded in the calculation of the quick ratio.
Which term is used to describe the stock of a firm with market-to-book ratio of
less than 1?
Value stock
What does inventory turnover assess?
The inventory management of a firm
You are comparing the return on equity of Firm 1 and Firm 2. Both firms have
an identical profit margin and asset turnover, but Firm 1 has an overall higher
return on equity. What must be true?
Firm 1 is using a higher proportion of debt to finance its operations.
Which method of ratio analysis looks at a firm's performance over time?
Trend analysis
You are a financial analyst of an investment bank, and you are doing research
on equity. You are looking at a book publisher's financial ratios in comparison
to its competitors and the industry average. What is this an example of?
Cross-sectional analysis
Which type of ratio are suppliers interested in?
Liquidity ratios
What is the ratio that tells you on average how long it takes for a firm to collect
accounts receivable?
Average collection period
What does a debt ratio of 40% indicate?
It indicates that 40% of assets are financed by debt.
What is operating margin useful for?
Comparing the profitability of firms with different capital structures
What does an average collection period of 70 tell you?
On average, a firm takes 70 days to collect accounts receivable.
What does high inventory turnover relative to the industry and competitors
indicate?
The firm does not hold enough inventory and is making its customers wait longer to
receive their purchased goods.
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