WGU D775 Intro to Business Finance OA EXAM
Questions and Answers | 2025 Update | 100%
Correct.
Characteristics of Preferred Stock - CORRECT ANSWER-Hybrid security, stockholders
have a higher claim to assets, safer investment, generally no voting rights, may
carry special voting rights under circumstances
____ represents ownership with voting rights and variable dividends. - CORRECT
ANSWER-Common stock
coupon rate of a bond - CORRECT ANSWER-the interest rate that the bond issuer has
agreed to pay the bondholder
Governments issue bonds to - CORRECT ANSWER-Finance public projects and manage
fiscal policies
Corporations issue bonds to - CORRECT ANSWER-Raise funds for operations and
growth
Market Capitalization - CORRECT ANSWER-number of shares x price per share
,____ stocks offer the potential for higher returns but come with a greater risk. -
CORRECT ANSWER-Common
AAA rated bonds are the ____ risky and has the lowest yield - CORRECT ANSWER-
Least
Corporate Bonds - CORRECT ANSWER-Bonds issued by companies to fund operating
expenses and business activities, typically risky, usually 6 month coupons to pay
interest. If not paid at maturity, can force bankruptcy
Two types of Public bonds - CORRECT ANSWER-Municipal (munis) and treasury
Municipal bond - CORRECT ANSWER-a bond issued by a state or local government or
municipality to finance such improvements as highways, state buildings, libraries,
parks, and schools
Treasury bonds - CORRECT ANSWER-Digitally issued by the federal government
(usually to companies). Low risk, most stable in world
How do companies raise capital through debt and equity financing? - CORRECT
ANSWER-Issue bonds (debt financing, must be paid back with interest) or sell stock
(equity financing, doesn't require repayment)
, financial derivatives - CORRECT ANSWER-Financial assets that derive their value
based on an underlying asset. Examples are options and futures.
Options - CORRECT ANSWER-financial derivatives that give buyers the right, but not
the obligation, to buy or sell an underlying asset at an agreed-upon price (strike
price) and date
Futures - CORRECT ANSWER-contracts to buy or sell at a specific date in the future at
a price specified today
Three main financial instruments - CORRECT ANSWER-Stocks, bonds and financial
derivatives
Investment funds - CORRECT ANSWER-Collect money from multiple individuals and
companies and pool it together to invest in diversified portfolios of assets (stocks,
bonds, other securities)
Benefits of investment funds - CORRECT ANSWER--Diversification
-economies of scale
-Professional management
Types of investment funds: - CORRECT ANSWER-Mutual funds, exchange-traded
funds (ETFs), hedge funds, and pension funds
Questions and Answers | 2025 Update | 100%
Correct.
Characteristics of Preferred Stock - CORRECT ANSWER-Hybrid security, stockholders
have a higher claim to assets, safer investment, generally no voting rights, may
carry special voting rights under circumstances
____ represents ownership with voting rights and variable dividends. - CORRECT
ANSWER-Common stock
coupon rate of a bond - CORRECT ANSWER-the interest rate that the bond issuer has
agreed to pay the bondholder
Governments issue bonds to - CORRECT ANSWER-Finance public projects and manage
fiscal policies
Corporations issue bonds to - CORRECT ANSWER-Raise funds for operations and
growth
Market Capitalization - CORRECT ANSWER-number of shares x price per share
,____ stocks offer the potential for higher returns but come with a greater risk. -
CORRECT ANSWER-Common
AAA rated bonds are the ____ risky and has the lowest yield - CORRECT ANSWER-
Least
Corporate Bonds - CORRECT ANSWER-Bonds issued by companies to fund operating
expenses and business activities, typically risky, usually 6 month coupons to pay
interest. If not paid at maturity, can force bankruptcy
Two types of Public bonds - CORRECT ANSWER-Municipal (munis) and treasury
Municipal bond - CORRECT ANSWER-a bond issued by a state or local government or
municipality to finance such improvements as highways, state buildings, libraries,
parks, and schools
Treasury bonds - CORRECT ANSWER-Digitally issued by the federal government
(usually to companies). Low risk, most stable in world
How do companies raise capital through debt and equity financing? - CORRECT
ANSWER-Issue bonds (debt financing, must be paid back with interest) or sell stock
(equity financing, doesn't require repayment)
, financial derivatives - CORRECT ANSWER-Financial assets that derive their value
based on an underlying asset. Examples are options and futures.
Options - CORRECT ANSWER-financial derivatives that give buyers the right, but not
the obligation, to buy or sell an underlying asset at an agreed-upon price (strike
price) and date
Futures - CORRECT ANSWER-contracts to buy or sell at a specific date in the future at
a price specified today
Three main financial instruments - CORRECT ANSWER-Stocks, bonds and financial
derivatives
Investment funds - CORRECT ANSWER-Collect money from multiple individuals and
companies and pool it together to invest in diversified portfolios of assets (stocks,
bonds, other securities)
Benefits of investment funds - CORRECT ANSWER--Diversification
-economies of scale
-Professional management
Types of investment funds: - CORRECT ANSWER-Mutual funds, exchange-traded
funds (ETFs), hedge funds, and pension funds
