C214 Financial Management WGU 2024 Test Questions With Complete Solutions

C214 Financial Management WGU 2024 Test Questions With Complete Solutions If accounts receivable increases, what is the impact on CFO? - CFO decreases Are actual taxes paid the same as how on the GAAP income statement? - No. Actual Taxes = IRS Rules Income Statement = GAAP Which decisions require using subjective estimates? - Economic life of a new asset. If there is a 30% change of a recession, what is the probability of expansion? - 70% *The sum of probabilities must equal 100% How much interest is paid on a 6% bond over 2 years and 3 months? - 2 years and 3 months: 2 + (3/12) = 2 + (.25) = 2.25 6% x 1,000 = $60 per year $60 x 2.25 = $135 How does a "prudent investor" select investments? - Seeks the highest return for "appropriate" amount of risk. What do points on the Efficient Frontier measure? - The maximum return for a given level of risk; maximum Return-to-Risk ratio. What is "Beta?" - Measure of a stock's risk relative to the market. Why are accurate forecasts important? - Plan for resources for production; accurate evaluation of capital projects. Which ratio is used in valuing a private company? - PE ratio in the "Comparable Multiples" method. What are 3 costs associated with holding inventory? - 1. Product 2. Storage 3. Opportunity What risk is eliminated by a diversified portfolio? - Idiosyncratic Risk - Risk affecting a single firm. What are the impacts of outsourcing? - Fewer U.S. jobs and lower priced products. What are the impacts of tariffs? - More U.S. jobs and higher product costs for consumers. What securities are exempt from FEDERAL income taxation? - Municipal bond interest is tax-exempt. Treasury securities ARE taxable.