WGU C214 Financial Mgmt Pass the
OA EXAM ACTUAL EXAM COMPLETE
180 QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT
ANSWERS) /ALREADY GRADED A+
voting rights -can skip dividend payments -dividends don't
change year-after-year -used in start ups (IPO) Preferred
stock dividends - ANSWER//can go without payment and
pay in arrears the following year Characteristics of
common stock are - 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 - ANSWER//preferred stock (in an
IPO) What stock is considered a hybrid -
ANSWER//preferred stock One thing common stock and
preferred stock have in common is - ANSWER//both have
no maturity date Which type of security has voting rights -
ANSWER//common stock Debt covenants and restrictions
help to ensure that - ANSWER//management is meeting
bond and shareholder expectations NOTE: covenants are
promises meant to be kept What is true regarding bonds -
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 -
ANSWER//required rate of return is equal to the coupon
rate Why are bonds the primary method for raising capital
- 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 -
,ANSWER//convertible bonds What is the interest rate for
annual payments of a bond known as - 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 - ANSWER//never change Debentures are -
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 -
ANSWER//has collateral like a mortgage The amount
repaid at the expiration date of a bond is - ANSWER//PAR
value NOTE: expiration date is also known as maturity
date PAR (or Face Value) is typically $1000 Duration
measures - ANSWER//the 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 -
ANSWER//years A bond premium occurs when -
ANSWER//bonds 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 - ANSWER//high
yield bonds without any stability "Leveraged" results in -
ANSWER//having 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 - ANSWER//LEAST liquid of current assets NOTE:
current assets take less than 12 months to make liquid
Net fixed assets are - ANSWER//long term assets such as
buildings, land, equipment, machinery NOTE: assets that
are not current A/P represents money paid to -
ANSWER//suppliers for what is bought on credit and
amount owed by a business to suppliers by agreement
NOTE: A/P is supplies, inventory, or PP&E Notes payable
involves - ANSWER//an explicit interest bearing
arrangement with the lender at interest cost NOTE: notes
, payable is a long-term liability Current liabilities are listed
in order of - ANSWER//maturity NOTE: current liabilities
are to be paid within 12 months Two things you can do
with net income - ANSWER//pay out as dividends or retain
(plow back into the firm) On the Statement of Cash Flows,
CFO's include - ANSWER//-cash receipts from customers
(inflow) -cash paid for inventory (outflow) -cash paid for
wages (outflow) NOTE: receipts of cash is inflow & what is
paid out is outflow Which is NOT considered an operating
expense - ANSWER//interest expense is NOT considered
an operating expense On the Statement of Cash Flows,
CFI includes - ANSWER//cash receipts from sale of
property and equipment (inflow), cash paid for purchase of
equipment (outflow) NOTE: receipts of cash is inflow &
what is paid out is outflow Which of the following is true
with respect to CFO - ANSWER//an increase in inventory
indicates a reduction in CFO NOTE: there is a cost
(reduction) to purchasing (increasing) inventory The
Statement of Cash Flows is not useful when addressing
the financial health of a firm due to the impact of accrual
accounting - ANSWER//FALSE - the impact of accrual
accounting is seen as MOST useful in relation to net
income Which is true with respect to CFF - ANSWER//an
increase in notes payable indicates an increase in CFF
Which is not a part of the Statement of Cash Flows -
ANSWER//cash flows from liquidating activities NOTE:
cash flows are operating, investing, and financing The
sum of CFO + CFI + CFF is equal to - ANSWER//the
change in cash during the period Depreciation expense is
a significant source of difference between net income and
CFO because - ANSWER//depreciation is a non-cash
expense on the Income Statement associated with the
acquisition of long-term assets Subordinated bonds -
ANSWER//are bonds not backed by collateral For
visualization purposes, CFI accounts are generally non-
current assets on the bottom of the asset side of the
Balance Sheet - ANSWER//TRUE NOTE: CFI is investing
OA EXAM ACTUAL EXAM COMPLETE
180 QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT
ANSWERS) /ALREADY GRADED A+
voting rights -can skip dividend payments -dividends don't
change year-after-year -used in start ups (IPO) Preferred
stock dividends - ANSWER//can go without payment and
pay in arrears the following year Characteristics of
common stock are - 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 - ANSWER//preferred stock (in an
IPO) What stock is considered a hybrid -
ANSWER//preferred stock One thing common stock and
preferred stock have in common is - ANSWER//both have
no maturity date Which type of security has voting rights -
ANSWER//common stock Debt covenants and restrictions
help to ensure that - ANSWER//management is meeting
bond and shareholder expectations NOTE: covenants are
promises meant to be kept What is true regarding bonds -
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 -
ANSWER//required rate of return is equal to the coupon
rate Why are bonds the primary method for raising capital
- 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 -
,ANSWER//convertible bonds What is the interest rate for
annual payments of a bond known as - 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 - ANSWER//never change Debentures are -
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 -
ANSWER//has collateral like a mortgage The amount
repaid at the expiration date of a bond is - ANSWER//PAR
value NOTE: expiration date is also known as maturity
date PAR (or Face Value) is typically $1000 Duration
measures - ANSWER//the 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 -
ANSWER//years A bond premium occurs when -
ANSWER//bonds 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 - ANSWER//high
yield bonds without any stability "Leveraged" results in -
ANSWER//having 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 - ANSWER//LEAST liquid of current assets NOTE:
current assets take less than 12 months to make liquid
Net fixed assets are - ANSWER//long term assets such as
buildings, land, equipment, machinery NOTE: assets that
are not current A/P represents money paid to -
ANSWER//suppliers for what is bought on credit and
amount owed by a business to suppliers by agreement
NOTE: A/P is supplies, inventory, or PP&E Notes payable
involves - ANSWER//an explicit interest bearing
arrangement with the lender at interest cost NOTE: notes
, payable is a long-term liability Current liabilities are listed
in order of - ANSWER//maturity NOTE: current liabilities
are to be paid within 12 months Two things you can do
with net income - ANSWER//pay out as dividends or retain
(plow back into the firm) On the Statement of Cash Flows,
CFO's include - ANSWER//-cash receipts from customers
(inflow) -cash paid for inventory (outflow) -cash paid for
wages (outflow) NOTE: receipts of cash is inflow & what is
paid out is outflow Which is NOT considered an operating
expense - ANSWER//interest expense is NOT considered
an operating expense On the Statement of Cash Flows,
CFI includes - ANSWER//cash receipts from sale of
property and equipment (inflow), cash paid for purchase of
equipment (outflow) NOTE: receipts of cash is inflow &
what is paid out is outflow Which of the following is true
with respect to CFO - ANSWER//an increase in inventory
indicates a reduction in CFO NOTE: there is a cost
(reduction) to purchasing (increasing) inventory The
Statement of Cash Flows is not useful when addressing
the financial health of a firm due to the impact of accrual
accounting - ANSWER//FALSE - the impact of accrual
accounting is seen as MOST useful in relation to net
income Which is true with respect to CFF - ANSWER//an
increase in notes payable indicates an increase in CFF
Which is not a part of the Statement of Cash Flows -
ANSWER//cash flows from liquidating activities NOTE:
cash flows are operating, investing, and financing The
sum of CFO + CFI + CFF is equal to - ANSWER//the
change in cash during the period Depreciation expense is
a significant source of difference between net income and
CFO because - ANSWER//depreciation is a non-cash
expense on the Income Statement associated with the
acquisition of long-term assets Subordinated bonds -
ANSWER//are bonds not backed by collateral For
visualization purposes, CFI accounts are generally non-
current assets on the bottom of the asset side of the
Balance Sheet - ANSWER//TRUE NOTE: CFI is investing
