WGU - D076 EXAM WITH DETAILED
QUESTIONS AND ALL VERIFIED
ACCURATE ANSWERS
Real Rate - CORRECT ANSWER An interest rate that is adjusted to remove the effects
of inflation.
Required Rate of Return - CORRECT ANSWER The minimum return or compensation
an investor requires in order to invest; see interest rate.
Research and Development - CORRECT ANSWER The business function responsible
for improving and developing services and products.
Retention Ratio - CORRECT ANSWER The percent of net income retained in the firm;
also called the plowback ratio.
Return - CORRECT ANSWER The money gained or lost on an investment over a
certain period of time.
Return On Assets (ROA) - CORRECT ANSWER A profitability ratio found by net
income divided by total assets.
Return On Equity (ROE) - CORRECT ANSWER A profitability ratio found by net income
divided by owners' equity.
Revenues - CORRECT ANSWER The top line of the income statement. The total
amount of money a business brings in (before subtracting any costs).
Risk - CORRECT ANSWER The possibility that the realized or actual return will differ
from the expected return.
Risk Avoidance - CORRECT ANSWER A way to manage risk by not performing an
activity that may carry risk.
Risk Premium - CORRECT ANSWER The compensation for the amount of risk taken
on by investors.
, Risk Reduction - CORRECT ANSWER A series of techniques that help reduce the
amount of risk a person is exposed to by taking a particular action.
Risk Retention - CORRECT ANSWER A decision to take responsibility for a particular
risk.
Risk Separation - CORRECT ANSWER A risk management technique that involves
dispersing assets geographically instead of concentrating them in one location.
Risk Transfer - CORRECT ANSWER A risk management technique that involves
reducing the amount of risk you are exposed to by transferring that risk to another
entity.
Risk-free Rate - CORRECT ANSWER The rate of return on an investment with no risk.
Sales - CORRECT ANSWER The top line of the income statement. The total amount of
money a business brings in (before subtracting out any costs).
Seasonal Firms - CORRECT ANSWER Firms whose performance varies according to
the season.
Secondary Market - CORRECT ANSWER The financial market where securities are
traded after the initial issuance.
Securitization - CORRECT ANSWER The process of combining several types of
contractual debt (such as mortgages) and reselling them as a package to investors.
Shareholders - CORRECT ANSWER A person who owns shares of a company's stock.
Simple Interest - CORRECT ANSWER The interest earned only on the principal.
Specialist - CORRECT ANSWER A market maker on the NYSE that holds an inventory
of securities and acts as a liquidity provider to those that wish to buy and sell.
Spontaneous Accounts - CORRECT ANSWER Accounts that vary naturally with sales.
Stakeholder - CORRECT ANSWER Anyone who may be affected by actions taken or a
decision made.
Standard Deviation - CORRECT ANSWER A measure of dispersion of possible
outcomes about the mean.
Steady State Growth - CORRECT ANSWER The level of growth where four key
financial ratios—profitability, asset utilization, leverage, and payout—are constant and
where the firm does not need to issue any new equity to fund the growth.
QUESTIONS AND ALL VERIFIED
ACCURATE ANSWERS
Real Rate - CORRECT ANSWER An interest rate that is adjusted to remove the effects
of inflation.
Required Rate of Return - CORRECT ANSWER The minimum return or compensation
an investor requires in order to invest; see interest rate.
Research and Development - CORRECT ANSWER The business function responsible
for improving and developing services and products.
Retention Ratio - CORRECT ANSWER The percent of net income retained in the firm;
also called the plowback ratio.
Return - CORRECT ANSWER The money gained or lost on an investment over a
certain period of time.
Return On Assets (ROA) - CORRECT ANSWER A profitability ratio found by net
income divided by total assets.
Return On Equity (ROE) - CORRECT ANSWER A profitability ratio found by net income
divided by owners' equity.
Revenues - CORRECT ANSWER The top line of the income statement. The total
amount of money a business brings in (before subtracting any costs).
Risk - CORRECT ANSWER The possibility that the realized or actual return will differ
from the expected return.
Risk Avoidance - CORRECT ANSWER A way to manage risk by not performing an
activity that may carry risk.
Risk Premium - CORRECT ANSWER The compensation for the amount of risk taken
on by investors.
, Risk Reduction - CORRECT ANSWER A series of techniques that help reduce the
amount of risk a person is exposed to by taking a particular action.
Risk Retention - CORRECT ANSWER A decision to take responsibility for a particular
risk.
Risk Separation - CORRECT ANSWER A risk management technique that involves
dispersing assets geographically instead of concentrating them in one location.
Risk Transfer - CORRECT ANSWER A risk management technique that involves
reducing the amount of risk you are exposed to by transferring that risk to another
entity.
Risk-free Rate - CORRECT ANSWER The rate of return on an investment with no risk.
Sales - CORRECT ANSWER The top line of the income statement. The total amount of
money a business brings in (before subtracting out any costs).
Seasonal Firms - CORRECT ANSWER Firms whose performance varies according to
the season.
Secondary Market - CORRECT ANSWER The financial market where securities are
traded after the initial issuance.
Securitization - CORRECT ANSWER The process of combining several types of
contractual debt (such as mortgages) and reselling them as a package to investors.
Shareholders - CORRECT ANSWER A person who owns shares of a company's stock.
Simple Interest - CORRECT ANSWER The interest earned only on the principal.
Specialist - CORRECT ANSWER A market maker on the NYSE that holds an inventory
of securities and acts as a liquidity provider to those that wish to buy and sell.
Spontaneous Accounts - CORRECT ANSWER Accounts that vary naturally with sales.
Stakeholder - CORRECT ANSWER Anyone who may be affected by actions taken or a
decision made.
Standard Deviation - CORRECT ANSWER A measure of dispersion of possible
outcomes about the mean.
Steady State Growth - CORRECT ANSWER The level of growth where four key
financial ratios—profitability, asset utilization, leverage, and payout—are constant and
where the firm does not need to issue any new equity to fund the growth.
