WGU C214 Final Exam Questions and Answers | Already Graded A | Western Governors University

A Coupon Rate The interest rate that a company promises to pay on bonds Market Rate The interest rate on other comparable bonds Par Value The amount payable on maturity of the bond M arket rate Same as YTM - Yield to Maturity Gordon Growth Model Assumes stable growth rates and does not incorporate risk CAPM Model Allows to determine expected return on stocks and incorporates risk How do public companies maximize shareholder value? By maximizing Earnings Per Share How do private companies maximize shareholder value? By keeping control within the company Positive credit rating has what effect on capital? Lowers cost of capital What is cash flow from operating activities? It is cash flow generated for sale of products and services What is the formula for retained earnings? Ending retained earnings=Beginning retained earnings + Net Income = Dividends Is depreciation and salvage value on an asset precise or is it an estimate? It is an estimate What is an example of accounting difference Companies using different accounting methods What is an example of a timing difference? Companies using different fiscal years Do stock holders or bond holders have voting rights? Stock holders have voting rights What factors are considered for the initial outlay of a new investment? Purchase price of new equipment, shipping costs, and investment in working capital What is the risk associated with debt financing? Too much debt can lead to bankruptcy What are inventory related costs? Product costs, storage costs, and opportunity costs What statements are required to be filed with the SEC Annual audited financial statements What are the issues with understanding foreign financial statements? Foreign financial statements use international financial reporting standards and they are different from US accounting standards What does cash flow from investing activities measure? It measure investments in long term assets such as building, equipment, and machinery What does the efficient frontier measure? It maximizes expected return for a given level of risk What is the objective of portfolio diversification? The objective is to reduce risk What is the definition of a current asset and