WGU C214 Objective Assessment Financial
Management Exam Questions and Answers
(2026/2027) (100% Verified Answers)
1. A bond's duration causes which type of risk?
A. Credit risk
B. Liquidity risk
C. Market risk
D. Inflation risk
Answer: C
2. A firm is considered a good investment if:
A. Its price is greater than intrinsic value
B. Its price is equal to intrinsic value
C. Its price is less than intrinsic value
D. Its price is greater than book value
Answer: C
3. A firm will have volatile profits if it has:
A. Low operating leverage and high financial leverage
B. High operating leverage, high financial leverage, and high combined cash
leverage
C. Low combined leverage and stable sales
D. High equity financing and low debt obligations
Answer: B
4. A potential project should be adopted if:
A. NPV is equal to zero
B. IRR is less than WACC
C. IRR is greater than WACC
D. The discount rate exceeds the IRR
Answer: C
,5. A prudent investor would seek to:
A. Maximize return regardless of risk
B. Minimize all investment risk
C. Maximize return for the investor's risk tolerance
D. Minimize return while eliminating all risk
Answer: C
6. A stock whose return is substantially affected by a recession is best described as:
A. A low beta stock
B. A preferred stock
C. A zero coupon stock
D. A high beta stock
Answer: D
7. A strong dollar has what effect on the economy?
A. Increases exports
B. Increases imports
C. Decreases imports
D. Reduces foreign competition
Answer: B
8. The basic balance sheet equation is:
A. Assets = Liabilities + Revenue
B. Liabilities = Assets + Equity
C. Equity = Assets - Liabilities
D. Assets = Revenue - Expenses
Answer: C
9. The statement of cash flows is best defined as:
A. A statement calculated for a different time period than the income statement
B. Calculated for the same period as the income statement, based on the income
statement and changes in the balance sheet
C. A permanent statement that is not reset at the end of the fiscal year
D. A statement that only reflects financing activities of the firm
,Answer: B
10. The Dodd-Frank Act regulates which segment of the U.S. economy?
A. Insurance industry
B. Real estate industry
C. Banking industry
D. Manufacturing industry
Answer: C
11. Excess leverage will likely result in:
A. Decreased WACC and increased stock price
B. Increased WACC and reduced stock price
C. Stable WACC and increased dividends
D. Reduced debt obligations and improved credit rating
Answer: B
12. The Financial Industry Regulatory Authority (FINRA) is responsible for:
A. Regulating the banking industry after the 2008 financial crisis
B. Separating commercial banks from investment banks
C. Licensing stock brokers and auditing brokerage firms
D. Registering all public securities offerings
Answer: C
13. Firms use sensitivity analysis because:
A. It determines the exact future value of investments
B. It anticipates the impact of erroneous forecasts
C. It eliminates all financial risk from investment decisions
D. It calculates the precise IRR for each project
Answer: B
14. For a semi-annual pay bond, which inputs must be adjusted?
A. PV, FV, and PMT
B. N, I/Y, and PMT
C. PMT, FV, and PV
D. N, FV, and PV
, Answer: B
15. FX hedging is used to:
A. Reduce domestic employment
B. Increase interest rates
C. Promote exports
D. Strengthen the domestic currency
Answer: C
16. The Garn-St. Germain Act of 1982:
A. Separated commercial banks from investment banks
B. Required firms to register with the SEC to sell public securities
C. Loosened restrictions on what financial institutions could offer as products
D. Established the Federal Reserve to deal with bank runs
Answer: C
17. How do you calculate the change in retained earnings?
A. Net income + dividends
B. Net income - dividends
C. Revenue - expenses
D. Assets - liabilities
Answer: B
18. How might a firm incentivize customers to pay sooner?
A. Increase the price of goods
B. Extend the payment deadline
C. Offer a larger discount
D. Reduce product quality
Answer: C
19. If a bond's price is at a discount, then:
A. Bond yield is less than the coupon rate
B. Bond yield equals the coupon rate
C. Bond yield is more than the coupon rate
Management Exam Questions and Answers
(2026/2027) (100% Verified Answers)
1. A bond's duration causes which type of risk?
A. Credit risk
B. Liquidity risk
C. Market risk
D. Inflation risk
Answer: C
2. A firm is considered a good investment if:
A. Its price is greater than intrinsic value
B. Its price is equal to intrinsic value
C. Its price is less than intrinsic value
D. Its price is greater than book value
Answer: C
3. A firm will have volatile profits if it has:
A. Low operating leverage and high financial leverage
B. High operating leverage, high financial leverage, and high combined cash
leverage
C. Low combined leverage and stable sales
D. High equity financing and low debt obligations
Answer: B
4. A potential project should be adopted if:
A. NPV is equal to zero
B. IRR is less than WACC
C. IRR is greater than WACC
D. The discount rate exceeds the IRR
Answer: C
,5. A prudent investor would seek to:
A. Maximize return regardless of risk
B. Minimize all investment risk
C. Maximize return for the investor's risk tolerance
D. Minimize return while eliminating all risk
Answer: C
6. A stock whose return is substantially affected by a recession is best described as:
A. A low beta stock
B. A preferred stock
C. A zero coupon stock
D. A high beta stock
Answer: D
7. A strong dollar has what effect on the economy?
A. Increases exports
B. Increases imports
C. Decreases imports
D. Reduces foreign competition
Answer: B
8. The basic balance sheet equation is:
A. Assets = Liabilities + Revenue
B. Liabilities = Assets + Equity
C. Equity = Assets - Liabilities
D. Assets = Revenue - Expenses
Answer: C
9. The statement of cash flows is best defined as:
A. A statement calculated for a different time period than the income statement
B. Calculated for the same period as the income statement, based on the income
statement and changes in the balance sheet
C. A permanent statement that is not reset at the end of the fiscal year
D. A statement that only reflects financing activities of the firm
,Answer: B
10. The Dodd-Frank Act regulates which segment of the U.S. economy?
A. Insurance industry
B. Real estate industry
C. Banking industry
D. Manufacturing industry
Answer: C
11. Excess leverage will likely result in:
A. Decreased WACC and increased stock price
B. Increased WACC and reduced stock price
C. Stable WACC and increased dividends
D. Reduced debt obligations and improved credit rating
Answer: B
12. The Financial Industry Regulatory Authority (FINRA) is responsible for:
A. Regulating the banking industry after the 2008 financial crisis
B. Separating commercial banks from investment banks
C. Licensing stock brokers and auditing brokerage firms
D. Registering all public securities offerings
Answer: C
13. Firms use sensitivity analysis because:
A. It determines the exact future value of investments
B. It anticipates the impact of erroneous forecasts
C. It eliminates all financial risk from investment decisions
D. It calculates the precise IRR for each project
Answer: B
14. For a semi-annual pay bond, which inputs must be adjusted?
A. PV, FV, and PMT
B. N, I/Y, and PMT
C. PMT, FV, and PV
D. N, FV, and PV
, Answer: B
15. FX hedging is used to:
A. Reduce domestic employment
B. Increase interest rates
C. Promote exports
D. Strengthen the domestic currency
Answer: C
16. The Garn-St. Germain Act of 1982:
A. Separated commercial banks from investment banks
B. Required firms to register with the SEC to sell public securities
C. Loosened restrictions on what financial institutions could offer as products
D. Established the Federal Reserve to deal with bank runs
Answer: C
17. How do you calculate the change in retained earnings?
A. Net income + dividends
B. Net income - dividends
C. Revenue - expenses
D. Assets - liabilities
Answer: B
18. How might a firm incentivize customers to pay sooner?
A. Increase the price of goods
B. Extend the payment deadline
C. Offer a larger discount
D. Reduce product quality
Answer: C
19. If a bond's price is at a discount, then:
A. Bond yield is less than the coupon rate
B. Bond yield equals the coupon rate
C. Bond yield is more than the coupon rate
