WGU D076 Question and answers
verified to pass 2025/2026
percentage of the principal that a lender charges a borrower for the use of assets. - correct answer
✔Interest rate
Also known as Discount rate, the cost to a firm to use an investor's capital - correct answer ✔Cost of
capital
Annual Interest = Principal x Interest Rate - correct answer ✔Simple interest
Total Interest = Annual interest x t - correct answer ✔Total interest
otal Interest = Principal x (1+Interest Rate/over/
¿ ¿Numbers of periods - Principal - correct answer ✔Compounding Interest
the rate of return or compensation that an investor or a lender will accept for investments such as
stocks, bonds, or loans. - correct answer ✔Required rate of return
The word compensation is used because this is the rate that investors or lenders will be compensated
for a given level of risk associated with investments or loans. - correct answer ✔hurdle rate
the loss of potential gain from other alternatives when one alternative is chosen. - correct answer
✔Opportunity cost
possibility that the realized or actual return will differ from the expected return. - correct answer ✔Risk
, the rate at which the average price level of goods and services in an economy increases over a period of
time. - correct answer ✔Inflation
1:Increased demand for goods and services
2:Rising costs
3:Adaptive expectations- when prices of goods and services go up, employees expect and even demand
higher wages to maintain their standard of living. - correct answer ✔Sources of inflation
Rate = Risk-Free Rate + Risk Premium - correct answer ✔Decomposing Interest Rate
same as the growth rate in purchasing power, even though the formula seems different. This is call the
Fisher Effect, an economic theory created by the economist Irving Fisher. - correct answer ✔Real rate
1. Standardization- Ratios standardize financial data to make them comparable across firms, even those
of distinctly different sizes.
2. Flexibility
3. Focus
4. Evaluation - correct answer ✔Why Are Ratios Useful
the process of completing a financial analysis and comparing a firm's performance to that of other
similar firms is known as benchmarking. - correct answer ✔Benchmarking
measure a firm's ability to meet short-term obligations without raising external capital. While everybody
is concerned about liquidity, short-term creditors such as banks and suppliers are particularly interested.
Liquidity is a measure of not only how much cash you have but also how easily you can convert short-
term assets into cash. - correct answer ✔Liquidity
1. Current Ratio=Current Assets/Current Liabilities
2. Quick Ratio=Current Assets - Inventory/Current Liabilities - correct answer ✔Liquidity
verified to pass 2025/2026
percentage of the principal that a lender charges a borrower for the use of assets. - correct answer
✔Interest rate
Also known as Discount rate, the cost to a firm to use an investor's capital - correct answer ✔Cost of
capital
Annual Interest = Principal x Interest Rate - correct answer ✔Simple interest
Total Interest = Annual interest x t - correct answer ✔Total interest
otal Interest = Principal x (1+Interest Rate/over/
¿ ¿Numbers of periods - Principal - correct answer ✔Compounding Interest
the rate of return or compensation that an investor or a lender will accept for investments such as
stocks, bonds, or loans. - correct answer ✔Required rate of return
The word compensation is used because this is the rate that investors or lenders will be compensated
for a given level of risk associated with investments or loans. - correct answer ✔hurdle rate
the loss of potential gain from other alternatives when one alternative is chosen. - correct answer
✔Opportunity cost
possibility that the realized or actual return will differ from the expected return. - correct answer ✔Risk
, the rate at which the average price level of goods and services in an economy increases over a period of
time. - correct answer ✔Inflation
1:Increased demand for goods and services
2:Rising costs
3:Adaptive expectations- when prices of goods and services go up, employees expect and even demand
higher wages to maintain their standard of living. - correct answer ✔Sources of inflation
Rate = Risk-Free Rate + Risk Premium - correct answer ✔Decomposing Interest Rate
same as the growth rate in purchasing power, even though the formula seems different. This is call the
Fisher Effect, an economic theory created by the economist Irving Fisher. - correct answer ✔Real rate
1. Standardization- Ratios standardize financial data to make them comparable across firms, even those
of distinctly different sizes.
2. Flexibility
3. Focus
4. Evaluation - correct answer ✔Why Are Ratios Useful
the process of completing a financial analysis and comparing a firm's performance to that of other
similar firms is known as benchmarking. - correct answer ✔Benchmarking
measure a firm's ability to meet short-term obligations without raising external capital. While everybody
is concerned about liquidity, short-term creditors such as banks and suppliers are particularly interested.
Liquidity is a measure of not only how much cash you have but also how easily you can convert short-
term assets into cash. - correct answer ✔Liquidity
1. Current Ratio=Current Assets/Current Liabilities
2. Quick Ratio=Current Assets - Inventory/Current Liabilities - correct answer ✔Liquidity
