WGU C214 Financial Mgmt Pass the OA Exam 160
Questions with Verified Answers
-dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO) - CORRECT ANSWER Characteristics of preferred stock
includes
can go without payment and pay in arrears the following year - CORRECT ANSWER
Preferred stock dividends
-voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
,-earnings are in dividends & the increase in price of stock - CORRECT ANSWER
Characteristics of common stock are
preferred stock (in an IPO) - CORRECT ANSWER New start up ventures often issue
preferred stock - CORRECT ANSWER What stock is considered a hybrid
both have no maturity date - CORRECT ANSWER One thing common stock and
preferred stock have in common is
common stock - CORRECT ANSWER Which type of security has voting rights
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept - CORRECT ANSWER Debt
covenants and restrictions help to ensure that
-when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000 - CORRECT ANSWER What is true
regarding bonds
required rate of return is equal to the coupon rate - CORRECT ANSWER Bond sells
at face value when
, because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue - CORRECT ANSWER Why are bonds the primary
method for raising capital
convertible bonds - CORRECT ANSWER What type of bond can be traded for stock
the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and will
remain unchanged - CORRECT ANSWER What is the interest rate for annual
payments of a bond known as
never change - CORRECT ANSWER Coupon rate is the established rate of the bond
and should
secured bonds
NOTE: debentures are a debt instrument (bond) issued to raise cash, secured
against a company's assets and backed by credit, transferable by the holder, and
may also be unsecured - CORRECT ANSWER Debentures are
has collateral like a mortgage - CORRECT ANSWER Secured loan
PAR value
Questions with Verified Answers
-dividends in arrears
-dividends are cumulative
-higher payoff claim in a BK (has first dibs in a BK)
-considered "hybrid" (part stock/part bond)
-no fixed maturity date
-no voting rights
-can skip dividend payments
-dividends don't change year-after-year
-used in start ups (IPO) - CORRECT ANSWER Characteristics of preferred stock
includes
can go without payment and pay in arrears the following year - CORRECT ANSWER
Preferred stock dividends
-voting rights
-no maturity date
-corporate governance
-lower payoff claim in BK
-variable returns
-unlimited earnings potential
,-earnings are in dividends & the increase in price of stock - CORRECT ANSWER
Characteristics of common stock are
preferred stock (in an IPO) - CORRECT ANSWER New start up ventures often issue
preferred stock - CORRECT ANSWER What stock is considered a hybrid
both have no maturity date - CORRECT ANSWER One thing common stock and
preferred stock have in common is
common stock - CORRECT ANSWER Which type of security has voting rights
management is meeting bond and shareholder expectations
NOTE: covenants are promises meant to be kept - CORRECT ANSWER Debt
covenants and restrictions help to ensure that
-when bond matures, bondholder gets lump sum back
-coupon rate doesn't change
-maturity is in years
-PAR value is typically $1000
-Future value (same as PAR) is typically $1000 - CORRECT ANSWER What is true
regarding bonds
required rate of return is equal to the coupon rate - CORRECT ANSWER Bond sells
at face value when
, because bonds remove the intermediary costs
NOTE: IPO's require an intermediary known as a syndicate - a group of banks
underwriting the security issue - CORRECT ANSWER Why are bonds the primary
method for raising capital
convertible bonds - CORRECT ANSWER What type of bond can be traded for stock
the coupon rate
NOTE: coupon rate is the established interest rate for the life of the bond and will
remain unchanged - CORRECT ANSWER What is the interest rate for annual
payments of a bond known as
never change - CORRECT ANSWER Coupon rate is the established rate of the bond
and should
secured bonds
NOTE: debentures are a debt instrument (bond) issued to raise cash, secured
against a company's assets and backed by credit, transferable by the holder, and
may also be unsecured - CORRECT ANSWER Debentures are
has collateral like a mortgage - CORRECT ANSWER Secured loan
PAR value
