WGU SCHOOL OF MATHEMATICS, STATISTICS AND ACTUARIAL SCIENCE| DEPARTMENT OF QUANTITATIVE METHODS / ECONOMICS / BUSINESS ANALYTICS BACHELOR OF SCIENCE / BUSINESS ADMINISTRATION PROGRAMME END-OF-SEMESTER FINAL SPRING EXAMINATION – 2025/2026 SESSION

WGU SCHOOL OF MATHEMATICS, STATISTICS AND
ACTUARIAL SCIENCE| DEPARTMENT OF QUANTITATIVE
METHODS / ECONOMICS / BUSINESS ANALYTICS
BACHELOR OF SCIENCE / BUSINESS ADMINISTRATION PROGRAMME
END-OF-SEMESTER FINAL SPRING EXAMINATION – 2025/2026
SESSION




Default Risk

Risk that a borrower will not make promised payments




Liquidity Risk

Risk of recieving less than fair value for an investment if it must be sold for cash quickly




Required Interest Rate on A Security

= Nominal Interest Rate

+ Default Risk Premium

+ Liquidity Premium

+ Maturity Risk Premium




Real Risk Free Rate / Nominal Risk Free Rate

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, - Single period interest rate for a completely risk-free security with no inflation added



- Nominal = Real Risk Free Rate + Expected Inflation Rate




Required Rate of Return

Required Rate of Return for an investor to willingly invest




Discount Rate

Used interchangeably with interest rates, especially in use of discounting cash flows




Opportunity Cost

The gain that is missed by not investing in a particular investment




Effective Annual Rate

The actualy rate of interst that is actually being earned after compounding more than annually




Continuous Compounding

1. Multiply rate by time

2. Multiple answer by e (Second LN)

3. Multiply by PV



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