WGU - D076 Glossary UPDATED Actual Exam Questions and CORRECT Answers
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Course
WGU - D076
Institution
WGU - D076
WGU - D076 Glossary UPDATED Actual
Exam Questions and CORRECT Answers
Accounting - CORRECT ANSWER- The system of recording, reporting, and
summarizing past financial information and transactions.
Accounts Receivable Turnover (AR Turnover) - CORRECT ANSWER- An activity ratio
found by credit ...
WGU - D076 Glossary UPDATED Actual
Exam Questions and CORRECT Answers
Accounting - CORRECT ANSWER- ✔✔The system of recording, reporting, and
summarizing past financial information and transactions.
Accounts Receivable Turnover (AR Turnover) - CORRECT ANSWER- ✔✔An activity ratio
found by credit sales divided by accounts receivable.
Activity Ratios - CORRECT ANSWER- ✔✔A category of ratios that measure how well a
company uses its assets to generate sales or cash, showing the firm's operational efficiency
and profitability.
Additional Funds Needed (AFN) - CORRECT ANSWER- ✔✔Another name for the
discretionary financing needed or external financing needed. It represents the additional
financing needed given a firm's expectations for future growth.
Affirmative Covenants - CORRECT ANSWER- ✔✔A bond covenant that describes things
the company pledges itself to do in order to protect bondholders.
Agency Costs - CORRECT ANSWER- ✔✔Costs that are incurred when management does
not act in the best interest of shareholders.
Agency Problem - CORRECT ANSWER- ✔✔When the agent (the management) does not act
in the best interest of the principal (the owners).
Aggressive Assets - CORRECT ANSWER- ✔✔Companies or securities with beta greater
than 1.
Annual Percentage Rate - CORRECT ANSWER- ✔✔The annual interest rate that is charged
for borrowing money or that is earned through investment.
,Annuity - CORRECT ANSWER- ✔✔A stream of cash flows of an equal amount paid every
consecutive period.
Annuity Due - CORRECT ANSWER- ✔✔A series of equal payments made at the beginning
of consecutive periods.
Asset Pricing - CORRECT ANSWER- ✔✔The process of valuing assets.
Auction Market - CORRECT ANSWER- ✔✔A secondary market with a physical location
and where prices are determined by investors' willingness to pay.
Average Collection Period (ACP) - CORRECT ANSWER- ✔✔An activity ratio found by the
number of days in a year (365) divided by AR turnover.
Balance Sheet Forecasting - CORRECT ANSWER- ✔✔Using sales growth and the profit
forecast to construct a pro forma balance sheet to understand the future implications of the
sources and uses of finances.
Banks and Credit Unions - CORRECT ANSWER- ✔✔Receive deposits and extend loans to
individuals and businesses.
Benchmarking - CORRECT ANSWER- ✔✔The process of completing a financial analysis to
compare a firm's financial performance to that of other similar firms.
Beta - CORRECT ANSWER- ✔✔A variable that describes how the price of a security varies
with the market.
Bid-ask Spread - CORRECT ANSWER- ✔✔The difference between the bid and ask prices
that compensate the specialist for the risk that he or she bears for willingness to provide
liquidity.
Board of Directors - CORRECT ANSWER- ✔✔A group of people who jointly supervise the
activities of an organization.
, Bond Indenture - CORRECT ANSWER- ✔✔A legal contract that governs the relationship
between a firm and its bondholders.
Bondholders - CORRECT ANSWER- ✔✔A person who loans a corporation money by
buying debt securities.
Business Finance - CORRECT ANSWER- ✔✔An area of finance that deals with sources of
funding, the capital structure of corporations, the actions that managers take to increase the
value of the firm to its owners, and the tools and analysis used to allocate financial resources.
Cannibalization - CORRECT ANSWER- ✔✔The reduction in sales of a company's own
products due to introduction of another similar product.
Capital - CORRECT ANSWER- ✔✔A financial asset that can be used by a firm or
individual. Examples of capital may be machinery or cash held by a firm.
Capital Asset Pricing Model (CAPM) - CORRECT ANSWER- ✔✔A model used to
determine the risk-return relationship for an asset.
Capital Budgeting - CORRECT ANSWER- ✔✔The process of evaluation and planning for
purchases of long-term assets.
Capital Budgeting Criteria - CORRECT ANSWER- ✔✔Metrics and calculations used to
determine whether a project or asset will add value and be a worthwhile investment.
Capital Investment - CORRECT ANSWER- ✔✔The sum of money invested in a business to
purchase long-term assets to further its objective of maximizing owner wealth.
Capital Markets - CORRECT ANSWER- ✔✔A type of financial market used for long-term
assets that are held for greater than one year.
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