WGU C214 FINANCIAL MGMT OA EXAM 160
QUESTIONS WITH VERIFIED ANSWERS 2025/2026
Characteristics of preferred stock includes - CORRECT ANSWER -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 - CORRECT ANSWER can go without payment and pay in
arrears the following year
Characteristics of common stock are - CORRECT ANSWER -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 - CORRECT ANSWER preferred stock (in an IPO)
What stock is considered a hybrid - CORRECT ANSWER preferred stock
One thing common stock and preferred stock have in common is - CORRECT
ANSWER both have no maturity date
Which type of security has voting rights - CORRECT ANSWER common stock
Debt covenants and restrictions help to ensure that - CORRECT ANSWER
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds - CORRECT ANSWER -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 - CORRECT ANSWER required rate of return is equal
to the coupon rate
, Why are bonds the primary method for raising capital - CORRECT ANSWER
because 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 - CORRECT ANSWER convertible bonds
What is the interest rate for annual payments of a bond known as - CORRECT
ANSWER the 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 - CORRECT ANSWER
never change
Debentures are - CORRECT ANSWER secured 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 - CORRECT ANSWER has collateral like a mortgage
The amount repaid at the expiration date of a bond is - CORRECT ANSWER PAR
value
NOTE: expiration date is also known as maturity date PAR (or Face Value) is
typically $1000
QUESTIONS WITH VERIFIED ANSWERS 2025/2026
Characteristics of preferred stock includes - CORRECT ANSWER -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 - CORRECT ANSWER can go without payment and pay in
arrears the following year
Characteristics of common stock are - CORRECT ANSWER -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 - CORRECT ANSWER preferred stock (in an IPO)
What stock is considered a hybrid - CORRECT ANSWER preferred stock
One thing common stock and preferred stock have in common is - CORRECT
ANSWER both have no maturity date
Which type of security has voting rights - CORRECT ANSWER common stock
Debt covenants and restrictions help to ensure that - CORRECT ANSWER
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept
What is true regarding bonds - CORRECT ANSWER -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 - CORRECT ANSWER required rate of return is equal
to the coupon rate
, Why are bonds the primary method for raising capital - CORRECT ANSWER
because 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 - CORRECT ANSWER convertible bonds
What is the interest rate for annual payments of a bond known as - CORRECT
ANSWER the 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 - CORRECT ANSWER
never change
Debentures are - CORRECT ANSWER secured 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 - CORRECT ANSWER has collateral like a mortgage
The amount repaid at the expiration date of a bond is - CORRECT ANSWER PAR
value
NOTE: expiration date is also known as maturity date PAR (or Face Value) is
typically $1000
