WGU D076 FINANCE SKILLS FOR MANAGERS
MODULE 9 COMPREHENSIVE SCRIPT 2026
QUESTIONS AND SOLUTIONS
◉ Holding Period Return. Answer: Return over the entire period that
an investor owns a financial security
◉ Beta. Answer: A measure of the volatility, or systematic risk, of a
security or a portfolio in comparison to the market as a whole.
◉ standard deviation. Answer: Used to measure the total risk of
securities
◉ annuity due. Answer: an annuity whose payments occur at the
beginning of each period, consecutively
◉ Par Bond. Answer: When the bond's coupon rate equals the
market yield;
Bonds are typically issued near par value
◉ Pi. Answer: Profitability index. At 1, the PI means a internal return
rate equal to the cost of capital
, ◉ Irr. Answer: Internal rate of return (IRR) is a discount rate at
which the net present value (NPV) of an investment is equal to zero.
If the IRR is higher than the cost of borrowing to fund the
investment, the investment should be profitable. Always shown as
percentage.
◉ Net Present Value (NPV). Answer: A method of ranking
investment proposals using the NPV, which is equal to the present
value of the project's free cash flows discounted at the cost of
capital. Shown as dollar amount.. At $0 it means it will neither add
nor subtract value.
◉ Inventory Turnover. Answer: An activity ratio found by COGS
divided by inventory
◉ dividends in arrears. Answer: Feature of preferred stock
specifying that if a company ignores preferred stock dividends it
cannot pay anything to it's common stockholders
◉ Agency Problem. Answer: the possibility of conflict of interest
between the owners and management of a firm
Resolved by aligning interests, example giving shares to
manangement
MODULE 9 COMPREHENSIVE SCRIPT 2026
QUESTIONS AND SOLUTIONS
◉ Holding Period Return. Answer: Return over the entire period that
an investor owns a financial security
◉ Beta. Answer: A measure of the volatility, or systematic risk, of a
security or a portfolio in comparison to the market as a whole.
◉ standard deviation. Answer: Used to measure the total risk of
securities
◉ annuity due. Answer: an annuity whose payments occur at the
beginning of each period, consecutively
◉ Par Bond. Answer: When the bond's coupon rate equals the
market yield;
Bonds are typically issued near par value
◉ Pi. Answer: Profitability index. At 1, the PI means a internal return
rate equal to the cost of capital
, ◉ Irr. Answer: Internal rate of return (IRR) is a discount rate at
which the net present value (NPV) of an investment is equal to zero.
If the IRR is higher than the cost of borrowing to fund the
investment, the investment should be profitable. Always shown as
percentage.
◉ Net Present Value (NPV). Answer: A method of ranking
investment proposals using the NPV, which is equal to the present
value of the project's free cash flows discounted at the cost of
capital. Shown as dollar amount.. At $0 it means it will neither add
nor subtract value.
◉ Inventory Turnover. Answer: An activity ratio found by COGS
divided by inventory
◉ dividends in arrears. Answer: Feature of preferred stock
specifying that if a company ignores preferred stock dividends it
cannot pay anything to it's common stockholders
◉ Agency Problem. Answer: the possibility of conflict of interest
between the owners and management of a firm
Resolved by aligning interests, example giving shares to
manangement
