WGU D076 Finance Skills for Managers
Exam 2026 | Verified Practice Questions
& Accurate Answers
What is the definition of finance?
What is the main objective of business finance versus personal
finance?
Module 2
What is the purpose of the financial market?
- To determine the value of financial securities based on supply and
demand and to provide liquidity for financial securities
o Liquidity = how easily financial securities (or other assets) can be
turned into cash
What is the role of the financial market?
- To lower cost for companies to raise capital
Which markets make up a large portion of the financial market?
- The money market
o For short-term securities (1 year or less) and managing liquidity
o Example: treasury bills, commercial paper, certificates of
deposits, repurchase agreements
- The capital market
o For long-term securities ( > 1 year) and investing/financing
o Example: stocks and bonds
More on the capital market
- The capital market consists of the primary and secondary market
o On the primary market, companies issue stocks and bonds for
the first time. They sell the bonds or stocks to syndicates - a
group that’s formed to handle stock or bond issues. They consist
of institutional investors or large investment banks. The
syndicates may or may not ultimately be the underwriters – the
ones who buy the stocks and bonds from the issuer and then sell
them to public investors at (hopefully) a higher price. There are
two ways underwriters are selected – either through a
competitive sale or negotiated sale. With a competitive sale, the
underwriters bid, and the underwriter with the highest bond and
,lowest interest rate is selected. With a negotiated sale, the
, process is a little bit more intensive with an interview and a
selection of who will manage the placement of the bonds.
o The secondary market is the stock market. Assets are priced
here, and the price is determined by supply and demand
What are the two types of secondary markets?
- Auction market: a physical location, like the floor of the New York Stock
Exchange, and prices are determined by what investors are willing to
pay
- Dealer market: NASDAQ – tech-oriented; involves dealers and no
physical location
There are three types of securities:
- Treasuries
- Corporate bonds
- Stocks
What are treasury bonds?
- The U.S. government is constantly investing in projects using tax
revenue. When tax revenues cannot pay for the cost of investing in
these projects, the U.S. Treasury will issue bonds to the public. These
bonds can range from 60 days to 30 years.
What are corporate bonds?
- Same concept as treasury bonds, only issues by corporations instead
of the government when the company may want to retain ownership
(i.e., do not want to issue more shares) and secure more favorable
terms than with a bank loan.
What are stocks?
- A share of ownership in the company.
What is a specialist?
- Someone on the NYSE who buys and sells stocks
- They are compensated for the risk involved in providing liquidity to
buyers and sellers though the bid-ask spread. They buy the stock from
the seller at a lower price and sell the stock to a buyer at a higher
Exam 2026 | Verified Practice Questions
& Accurate Answers
What is the definition of finance?
What is the main objective of business finance versus personal
finance?
Module 2
What is the purpose of the financial market?
- To determine the value of financial securities based on supply and
demand and to provide liquidity for financial securities
o Liquidity = how easily financial securities (or other assets) can be
turned into cash
What is the role of the financial market?
- To lower cost for companies to raise capital
Which markets make up a large portion of the financial market?
- The money market
o For short-term securities (1 year or less) and managing liquidity
o Example: treasury bills, commercial paper, certificates of
deposits, repurchase agreements
- The capital market
o For long-term securities ( > 1 year) and investing/financing
o Example: stocks and bonds
More on the capital market
- The capital market consists of the primary and secondary market
o On the primary market, companies issue stocks and bonds for
the first time. They sell the bonds or stocks to syndicates - a
group that’s formed to handle stock or bond issues. They consist
of institutional investors or large investment banks. The
syndicates may or may not ultimately be the underwriters – the
ones who buy the stocks and bonds from the issuer and then sell
them to public investors at (hopefully) a higher price. There are
two ways underwriters are selected – either through a
competitive sale or negotiated sale. With a competitive sale, the
underwriters bid, and the underwriter with the highest bond and
,lowest interest rate is selected. With a negotiated sale, the
, process is a little bit more intensive with an interview and a
selection of who will manage the placement of the bonds.
o The secondary market is the stock market. Assets are priced
here, and the price is determined by supply and demand
What are the two types of secondary markets?
- Auction market: a physical location, like the floor of the New York Stock
Exchange, and prices are determined by what investors are willing to
pay
- Dealer market: NASDAQ – tech-oriented; involves dealers and no
physical location
There are three types of securities:
- Treasuries
- Corporate bonds
- Stocks
What are treasury bonds?
- The U.S. government is constantly investing in projects using tax
revenue. When tax revenues cannot pay for the cost of investing in
these projects, the U.S. Treasury will issue bonds to the public. These
bonds can range from 60 days to 30 years.
What are corporate bonds?
- Same concept as treasury bonds, only issues by corporations instead
of the government when the company may want to retain ownership
(i.e., do not want to issue more shares) and secure more favorable
terms than with a bank loan.
What are stocks?
- A share of ownership in the company.
What is a specialist?
- Someone on the NYSE who buys and sells stocks
- They are compensated for the risk involved in providing liquidity to
buyers and sellers though the bid-ask spread. They buy the stock from
the seller at a lower price and sell the stock to a buyer at a higher
