WGU D076 Objective Assessment
Version 1 exam with questions
and answers graded a+
Customer loyalty - ANSWERS>>>>>If Jack sells his company's investment
product, the customer's loyalty to the company is doubled.
Manager manipulation of accounting - ANSWERS>>>>>A manager might
manipulate accounting procedures to inflate the earnings of a company.
Agency problem - ANSWERS>>>>>Occurs when the agent (a manager)
does not act in the best interest of the owners.
Covenant - ANSWERS>>>>>A strict covenant that the company cannot
easily finance a project with a mortgage loan from a bank.
Risk of Covenant - ANSWERS>>>>>By setting a strict covenant, there is a
risk that the company may not meet its obligation, which would deter the
company from taking on risky projects.
Project Assessment - ANSWERS>>>>>The company's assessment of the
project indicates that the company may experience several years of loss
until the project becomes profitable.
Loan Repayment Risk - ANSWERS>>>>>This means that the company might
lose its ability to pay back the loan and the interest on the mortgage.
,Bank's Protective Action - ANSWERS>>>>>What action might the bank take
to protect its interest?
Services Offered by Financial Institutions - ANSWERS>>>>>Accepting a
wide variety of deposits, offering investment products, providing loans,
and brokering financial transactions.
Types of Financial Institutions - ANSWERS>>>>>Financial institutions such
as banks, insurance companies, and mutual fund companies provide these
services.
Objective of Personal Financial Goals - ANSWERS>>>>>To maximize
individual utility - You set goals and act to increase your satisfaction or
happiness by taking care of necessities and achieving priorities.
Financial Manager's Task - ANSWERS>>>>>Making investing decisions -
Making investment decisions does not involve the issuance of new stocks
and bonds.
Primary Market - ANSWERS>>>>>This is the purpose of a primary market.
Investment Institution - ANSWERS>>>>>Investment institutions provide
individuals and firms access to financial markets.
Mutual Fund - ANSWERS>>>>>Which type of financial institution is a mutual
fund?
, Pension Funds - ANSWERS>>>>>Pension funds specialize in managing and
administering retirement funds.
Lagging Indicator - ANSWERS>>>>>CPI usually changes after the economy
as a whole changes.
Definition of Ethical - ANSWERS>>>>>Ethical refers to the accepted
standards of conduct that guide a person's behavior.
Agency Problem - ANSWERS>>>>>Agency problem due to conflicting
interests - Accounting manipulation by management in pursuit of higher
stock-related compensation is an example of an agency problem.
Ethical Issue in Agency Problem - ANSWERS>>>>>Which ethical issue is
occurring in this situation?
Annual Percentage Rate (APR) - ANSWERS>>>>>The APR is the annual
interest rate that is charged for borrowing money or that is earned
through investment, and it is calculated on an annual basis.
Hurdle Rate - ANSWERS>>>>>It is the minimum rate that a firm must
surpass to accept a project.
Inflation Rate - ANSWERS>>>>>The rate at which the average price level of
a basket of goods and services in an economy increases.
Risk-Free Rate - ANSWERS>>>>>What does the risk-free rate indicate?
Version 1 exam with questions
and answers graded a+
Customer loyalty - ANSWERS>>>>>If Jack sells his company's investment
product, the customer's loyalty to the company is doubled.
Manager manipulation of accounting - ANSWERS>>>>>A manager might
manipulate accounting procedures to inflate the earnings of a company.
Agency problem - ANSWERS>>>>>Occurs when the agent (a manager)
does not act in the best interest of the owners.
Covenant - ANSWERS>>>>>A strict covenant that the company cannot
easily finance a project with a mortgage loan from a bank.
Risk of Covenant - ANSWERS>>>>>By setting a strict covenant, there is a
risk that the company may not meet its obligation, which would deter the
company from taking on risky projects.
Project Assessment - ANSWERS>>>>>The company's assessment of the
project indicates that the company may experience several years of loss
until the project becomes profitable.
Loan Repayment Risk - ANSWERS>>>>>This means that the company might
lose its ability to pay back the loan and the interest on the mortgage.
,Bank's Protective Action - ANSWERS>>>>>What action might the bank take
to protect its interest?
Services Offered by Financial Institutions - ANSWERS>>>>>Accepting a
wide variety of deposits, offering investment products, providing loans,
and brokering financial transactions.
Types of Financial Institutions - ANSWERS>>>>>Financial institutions such
as banks, insurance companies, and mutual fund companies provide these
services.
Objective of Personal Financial Goals - ANSWERS>>>>>To maximize
individual utility - You set goals and act to increase your satisfaction or
happiness by taking care of necessities and achieving priorities.
Financial Manager's Task - ANSWERS>>>>>Making investing decisions -
Making investment decisions does not involve the issuance of new stocks
and bonds.
Primary Market - ANSWERS>>>>>This is the purpose of a primary market.
Investment Institution - ANSWERS>>>>>Investment institutions provide
individuals and firms access to financial markets.
Mutual Fund - ANSWERS>>>>>Which type of financial institution is a mutual
fund?
, Pension Funds - ANSWERS>>>>>Pension funds specialize in managing and
administering retirement funds.
Lagging Indicator - ANSWERS>>>>>CPI usually changes after the economy
as a whole changes.
Definition of Ethical - ANSWERS>>>>>Ethical refers to the accepted
standards of conduct that guide a person's behavior.
Agency Problem - ANSWERS>>>>>Agency problem due to conflicting
interests - Accounting manipulation by management in pursuit of higher
stock-related compensation is an example of an agency problem.
Ethical Issue in Agency Problem - ANSWERS>>>>>Which ethical issue is
occurring in this situation?
Annual Percentage Rate (APR) - ANSWERS>>>>>The APR is the annual
interest rate that is charged for borrowing money or that is earned
through investment, and it is calculated on an annual basis.
Hurdle Rate - ANSWERS>>>>>It is the minimum rate that a firm must
surpass to accept a project.
Inflation Rate - ANSWERS>>>>>The rate at which the average price level of
a basket of goods and services in an economy increases.
Risk-Free Rate - ANSWERS>>>>>What does the risk-free rate indicate?
