WGU C214 EXAM 300 QUESTIONS & CORRECT
ANSWERS LATEST 2025
Corporate Finance - ANSWER-focuses on financial decision making by a firms
management
Investments - ANSWER-various types of financial instruments (stocks, bonds, etc)
Banking or Financial Institutions - ANSWER-make money by paying depositors a
smaller interest rate than the interest rate charged to borrowers
Treasury Securities - ANSWER-generally bonds that are issued by the US
government
Corporate Bonds - ANSWER-firms borrowing from the public
Stocks - ANSWER-a share of ownership in a company
Primary financial markets - ANSWER-markets where securities are first issued
Syndicate - ANSWER-a group that is temporarily formed to handle a bond or stock
issue: generally large investment bank or institutional investors
,Underwriter - ANSWER-responsible for determining the value of the security; may
purchase all the securities & then resale to investors
Competitive sale - ANSWER-underwriters submit bids offering highest
price/lowest interest rate; underwriter resales a slightly higher price
Negotiated sale - ANSWER-underwriters submit bids, go thru interview to be
selected
Secondary financial markets - ANSWER-where securities are traded after the
initial offering (stock market)
Auction market - ANSWER-has a physical location & prices are determined by the
highest price an investor is willing to pay (New York Stock Exchange)
Dealer market - ANSWER-no physical location- securities are bought & sold thru a
network of dealers that trade for themselves; multi dealers per stock (NASDAQ)
Role of financial markets - ANSWER-they reduce the cost of borrowing from the
public or selling ownership to the public
Role of Specialist (NYSE) or Dealers - ANSWER-provide liquidity for a fair & orderly
market; may increase the spread to do so (charge a lower price to seller and a
higher price to buyer)
Financial market liquidity - ANSWER-the ease of trading in the market (high
frquency traders)
,Market orders - ANSWER-time sensitive; sales at current bid price/buys at current
asking price when order is placed-immediately
Limited orders - ANSWER-price sensitive; sell occurs when price of stock matches
order price
Role of price - ANSWER-convet information to consumers; affect incentives
&affect the distribution of income
Dollar Returns - ANSWER-Pt - Pt-1 + CFt (Pt= sold price, Pt-1=bought price,
CFt=cash flow-coupons for bonds/dividians for stocks)
Percentage Returns - ANSWER-Pt - Pt-1/Pt-1 + CFt/Pt-1 x 100 (1.2)
(figure for dollar return and divide into bought price)
Goal of company/firm - ANSWER-to maximize shareholder value or maximize
profit
Agency costs - ANSWER-costs that are incurred when management doesn't act in
the best interests of shareholders
Profit maximizarion - ANSWER-the potential effect of focusing soley on profits
Accounting - ANSWER-is backward-looking and risk free
, Finance - ANSWER-is forward-looking and involes massive uncertainty
Income Statement - ANSWER-show results of operation over time; revenues -
expenses = net income
Balance Sheet - ANSWER-a "snap shot" of a firm's assests & financing at a
paticular point in time; Assets= Liabilities + Owner's Equity
Statement of Cash Flows - ANSWER-tracks all cash in and out of the firm
Cash Accounting - ANSWER-cash in =revenue; cash out=expense
Accrual Accounting - ANSWER-revenues are recognized when the earnings
process is complete; expenses are "matched" to recongized revenues
Cash-based income - ANSWER-an informal metric based on cash in & cash out of
the firm
Income for tax purposes - ANSWER-based on the government's definition of
income, this is the amount of income the government will tax
Accounting income - ANSWER-the income calculated using accrual accounting
(aka, GAAP); best & most complicated metric for understanding the operations of
the firm
On the Income statement - ANSWER-Revenues- Cost of goods sold= Gross profit
ANSWERS LATEST 2025
Corporate Finance - ANSWER-focuses on financial decision making by a firms
management
Investments - ANSWER-various types of financial instruments (stocks, bonds, etc)
Banking or Financial Institutions - ANSWER-make money by paying depositors a
smaller interest rate than the interest rate charged to borrowers
Treasury Securities - ANSWER-generally bonds that are issued by the US
government
Corporate Bonds - ANSWER-firms borrowing from the public
Stocks - ANSWER-a share of ownership in a company
Primary financial markets - ANSWER-markets where securities are first issued
Syndicate - ANSWER-a group that is temporarily formed to handle a bond or stock
issue: generally large investment bank or institutional investors
,Underwriter - ANSWER-responsible for determining the value of the security; may
purchase all the securities & then resale to investors
Competitive sale - ANSWER-underwriters submit bids offering highest
price/lowest interest rate; underwriter resales a slightly higher price
Negotiated sale - ANSWER-underwriters submit bids, go thru interview to be
selected
Secondary financial markets - ANSWER-where securities are traded after the
initial offering (stock market)
Auction market - ANSWER-has a physical location & prices are determined by the
highest price an investor is willing to pay (New York Stock Exchange)
Dealer market - ANSWER-no physical location- securities are bought & sold thru a
network of dealers that trade for themselves; multi dealers per stock (NASDAQ)
Role of financial markets - ANSWER-they reduce the cost of borrowing from the
public or selling ownership to the public
Role of Specialist (NYSE) or Dealers - ANSWER-provide liquidity for a fair & orderly
market; may increase the spread to do so (charge a lower price to seller and a
higher price to buyer)
Financial market liquidity - ANSWER-the ease of trading in the market (high
frquency traders)
,Market orders - ANSWER-time sensitive; sales at current bid price/buys at current
asking price when order is placed-immediately
Limited orders - ANSWER-price sensitive; sell occurs when price of stock matches
order price
Role of price - ANSWER-convet information to consumers; affect incentives
&affect the distribution of income
Dollar Returns - ANSWER-Pt - Pt-1 + CFt (Pt= sold price, Pt-1=bought price,
CFt=cash flow-coupons for bonds/dividians for stocks)
Percentage Returns - ANSWER-Pt - Pt-1/Pt-1 + CFt/Pt-1 x 100 (1.2)
(figure for dollar return and divide into bought price)
Goal of company/firm - ANSWER-to maximize shareholder value or maximize
profit
Agency costs - ANSWER-costs that are incurred when management doesn't act in
the best interests of shareholders
Profit maximizarion - ANSWER-the potential effect of focusing soley on profits
Accounting - ANSWER-is backward-looking and risk free
, Finance - ANSWER-is forward-looking and involes massive uncertainty
Income Statement - ANSWER-show results of operation over time; revenues -
expenses = net income
Balance Sheet - ANSWER-a "snap shot" of a firm's assests & financing at a
paticular point in time; Assets= Liabilities + Owner's Equity
Statement of Cash Flows - ANSWER-tracks all cash in and out of the firm
Cash Accounting - ANSWER-cash in =revenue; cash out=expense
Accrual Accounting - ANSWER-revenues are recognized when the earnings
process is complete; expenses are "matched" to recongized revenues
Cash-based income - ANSWER-an informal metric based on cash in & cash out of
the firm
Income for tax purposes - ANSWER-based on the government's definition of
income, this is the amount of income the government will tax
Accounting income - ANSWER-the income calculated using accrual accounting
(aka, GAAP); best & most complicated metric for understanding the operations of
the firm
On the Income statement - ANSWER-Revenues- Cost of goods sold= Gross profit
