WGU C214 Financial Mgmt Pass the
OA Question and answers already
passed 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
Duration measures - correct 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 - correct answer ✔years
A bond premium occurs when - correct 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 - correct answer ✔high yield bonds without any stability
OA Question and answers already
passed 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
Duration measures - correct 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 - correct answer ✔years
A bond premium occurs when - correct 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 - correct answer ✔high yield bonds without any stability
