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WGU C214 Financial Mgmt Pass the OA 2024/2025 already graded A+
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  • Financial Management
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  • Western Governers University

WGU C214 Financial Mgmt Pass the OA 2024/2025 already graded A+

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Información del documento

  • 24 de febrero de 2024
  • 12
  • 2023/2024
  • Examen
  • Preguntas y respuestas

Temas

  • financial management
  • characteristics of preferred stock includes ans
  • characteristics of common stock are ans voting r
  • which type of security has voting rights anscomm

Escuela, estudio y materia

  • Western Governers University
  • Financial Management
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WGU C214 Financial Mgmt Pass the OA

Characteristics of preferred stock includes - ANS-dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO)

Preferred stock dividends - ANScan go without payment and pay in arrears the following year

Characteristics of common stock are - ANS-voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
-earnings are in dividends & the increase in price of stock

New start up ventures often issue - ANSpreferred stock (in an IPO)

What stock is considered a hybrid - ANSpreferred stock

One thing common stock and preferred stock have in common is - ANSboth have no maturity
date

Which type of security has voting rights - ANScommon stock

Debt covenants and restrictions help to ensure that - ANSmanagement is meeting bond and
shareholder expectations
NOTE: covenants are promises meant to be kept

What is true regarding bonds - ANS-when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000

Bond sells at face value when - ANSrequired rate of return is equal to the coupon rate

, Why are bonds the primary method for raising capital - ANSbecause bonds remove the
intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks underwriting the
security issue

What type of bond can be traded for stock - ANSconvertible bonds

What is the interest rate for annual payments of a bond known as - ANSthe coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and will remain
unchanged

Coupon rate is the established rate of the bond and should - ANSnever change

Debentures are - ANSsecured bonds
NOTE: debentures are a debt instrument (bond) issued to raise cash, secured against a
company's assets and backed by credit, transferable by the holder, and may also be unsecured

Secured loan - ANShas collateral like a mortgage

The amount repaid at the expiration date of a bond is - ANSPAR value
NOTE: expiration date is also known as maturity date PAR (or Face Value) is typically $1000

Duration measures - ANSthe market risk of a bond and is the percentage drop in price caused
by a 1% increase in yield (rate)
NOTE: measurement of the drop in price after a rate increase

Maturity of bonds is calculated in - ANSyears

A bond premium occurs when - ANSbonds are issued for an amount greater than their face or
maturity amount; caused by the bonds having a stated interest rate that is higher than the
market interest rate for similar bonds

Junk Bonds are - ANShigh yield bonds without any stability

"Leveraged" results in - ANShaving more debt (bonds) than equity (stock) and lower stock
prices
NOTE: recall that debt is safer and levels out risk in a portfolio

In current assets, inventory is the - ANSLEAST liquid of current assets
NOTE: current assets take less than 12 months to make liquid

Net fixed assets are - ANSlong term assets such as buildings, land, equipment, machinery
NOTE: assets that are not current

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