WGU C201 PRE-ASSESSMENT
Which two activities are prohibited by insider trading laws and should be avoided
by a firm's employees? Choose 2 answers - ANSWERS-Selling company stock
because a co-worker told the employee the company's new drug is failing in
clinical trial, buying stock in the public company for which the employee works
based on a conversation the employee overheard at a cocktail party between two
of the company's executives.
Which two risks does a firm face by funding the purchase of long-term assets with
short-term funding sources? Choose 2 ansers - ANSWERS-Volatility of interest
rates, frequent renewals
Which funding source should a firm use if it wishes to secure long-term financing
while retaining all of its equity? - ANSWERS-private equity fund
Which three characteristics make commercial paper a low-risk, attractive source
of short-term funding for a business? - ANSWERS-It has a maturity that ranges
between 1 and 270 days, it carries interest rates that are 1 to 2 percent less than
bank loans, it can make large amounts of money available
What should a firm do to manage the risk of using leverage when exploring long-
term funding options? - ANSWERS-Ensure that earnings remain larger than
interests payments
, Which financial statement should an investor examine to identify the liabilities of
a firm? - ANSWERS-The balance sheet
A company wishes to determine if it should fund a project with bonds or equity.
Which business concept would it most likely use to assist in the decision? -
ANSWERS-Leverage
Which calculation determines a firm's return on equity? - ANSWERS-Net income
divided by average equity
Why should companies that are conservative investors with liquidity concerns
invest their excess cash in money market funds? - ANSWERS-it converts easily to
cash
Which regulatory relationship with the Securities and Exchange Commission (SEC)
historically has acted to prohibit the U.S. from adopting the International
Financial Reporting Standards (IFRS)? - ANSWERS-FASB requires companies to
comply with GAAP that differ from IFRS
Which users of financial statements use the financial statements to evaluate
operations of the firm and to make investment decisions? - ANSWERS-owners and
creditors
What is considered the heart of any information system? - ANSWERS-The
Database
Which two activities are prohibited by insider trading laws and should be avoided
by a firm's employees? Choose 2 answers - ANSWERS-Selling company stock
because a co-worker told the employee the company's new drug is failing in
clinical trial, buying stock in the public company for which the employee works
based on a conversation the employee overheard at a cocktail party between two
of the company's executives.
Which two risks does a firm face by funding the purchase of long-term assets with
short-term funding sources? Choose 2 ansers - ANSWERS-Volatility of interest
rates, frequent renewals
Which funding source should a firm use if it wishes to secure long-term financing
while retaining all of its equity? - ANSWERS-private equity fund
Which three characteristics make commercial paper a low-risk, attractive source
of short-term funding for a business? - ANSWERS-It has a maturity that ranges
between 1 and 270 days, it carries interest rates that are 1 to 2 percent less than
bank loans, it can make large amounts of money available
What should a firm do to manage the risk of using leverage when exploring long-
term funding options? - ANSWERS-Ensure that earnings remain larger than
interests payments
, Which financial statement should an investor examine to identify the liabilities of
a firm? - ANSWERS-The balance sheet
A company wishes to determine if it should fund a project with bonds or equity.
Which business concept would it most likely use to assist in the decision? -
ANSWERS-Leverage
Which calculation determines a firm's return on equity? - ANSWERS-Net income
divided by average equity
Why should companies that are conservative investors with liquidity concerns
invest their excess cash in money market funds? - ANSWERS-it converts easily to
cash
Which regulatory relationship with the Securities and Exchange Commission (SEC)
historically has acted to prohibit the U.S. from adopting the International
Financial Reporting Standards (IFRS)? - ANSWERS-FASB requires companies to
comply with GAAP that differ from IFRS
Which users of financial statements use the financial statements to evaluate
operations of the firm and to make investment decisions? - ANSWERS-owners and
creditors
What is considered the heart of any information system? - ANSWERS-The
Database
