WGU C214 OA Financial Management Exam Questions and Answers (2024 / 2025) | 100% Correct Verified Answers Grade A+
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WGU C214 OA Financial Management
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WGU C214 OA Financial Management
WGU C214 OA Financial Management Exam Questions and Answers (2024 / 2025) | 100% Correct Verified Answers Grade A+
1) How does a good credit rating from S&P and Moody's affect the firm? - CORRECT Lowers the cost of financing. a credit downgrade increases the cost of financing
2) If a firm's r...
WGU C214 OA Financial Management Exam
Questions and Answers () | 100%
Correct Verified Answers Grade A+
1) How does a good credit rating from S&P and Moody's affect the firm? -
CORRECT Lowers the cost of financing. a credit downgrade increases the cost
of financing
2) If a firm's risk-return line is above the market risk-return line, what happens? -
CORRECT The firm's stock price will increase to reduce it expected return to the
market level
3) Which will be larger: accrual taxes payable or accounting income tax expense -
CORRECT Accounting tax expense will be higher; actual taxes based on IRS
rules will be lower
4) Which financial ratios measure "efficiency"? - CORRECT Asset turnover and
Fixed Asset turnover
5) Which ratio is the best measure of a firm's ability to pay bills? - CORRECT Quick
Ratio
6) Which decision requires using subjective estimates? - CORRECT Economic life
of a new asset
7) What is the yield to maturity on a bond? - CORRECT The return earned from the
purchase date to maturity
8) If a firm buys a 30-day CD, where is it carried on the balance sheet? -
CORRECT Cash and ST in current assets
9) How does a "prudent investor" select investments? - CORRECT Seeks the
highest return for "reasonable" amount of risk
10) What is the difference between WACC and CAPM's required return? -
CORRECT CAPM includes only equity required return; WACC includes debt
and equity
11) What do points on the Efficient Frontier measure? - CORRECT The maximum
return for a given level of risk; maximum Return-to-risk ratio
12) What is Beta? - CORRECT Measure of volatility of a stock's risk relative to the
market
This study source was downloaded by 100000888206670 from CourseHero.com on 08-26-2024 12:12:30 GMT -05:00
, 13) Why are accurate forecasts important? - CORRECT Plan for resources to
support sales
14) Which leverage measure shows the impact of EBIT changes on pre-tax profit
(EBT)? - CORRECT Financial leverage
15) Which ratios are used in working capital management? - CORRECT Cash ratio,
Current ratio - ratios containing current assets and/or current liabilities
16) Which ratio is used for valuing a private company? - CORRECT Price-to-
earnings (PE) ratio
17) What are the 4 costs associated with holding inventory? - CORRECT Product,
storage, holding, and opportunity
18) What risk is eliminated by a diversified portfolio? - CORRECT Idiosyncratic risk -
risk affecting a single firm
19) What is the "secondary" market? - CORRECT Investors trading securities
among themselves after initial issuance of securities
20) What are impacts of outsourcing? - CORRECT Fewer jobs and lower priced
products
21) What are the impacts of tariffs? - CORRECT Protects inefficient firms and
employees; higher product costs for consumers
22) Which item is transferred from the income statement to the balance sheet? -
CORRECT Depreciation expense
23) If two companies use different inventory valuation methods, what is this called? -
CORRECT An "accounting difference"
24) What securities are exempt from federal income taxation? -
CORRECT Municipal bonds
25) Why would a firm prefer to issue debt rather than stock? - CORRECT Deb has a
lower required return; debt interest is tax deductible; avoids dilution of ownership
26) What happens to APY as the number of interest payment periods per year
increase? - CORRECT APY increases
27) What is the present value of future cash flows of a stock called? -
CORRECT Intrinsic Value
This study source was downloaded by 100000888206670 from CourseHero.com on 08-26-2024 12:12:30 GMT -05:00
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