WGU D076 OA PRACTICE TEST
QUESTIONS, LATEST UPDATE 2026/2027,
WITH CORRECT DETAILED ANSWERS
ALREADY GRADED A+ PASS GUARANTEED
What is the ratio that tells you, on average, how long it takes for a firm to collect
accounts receivable? - ANSWER Average collection period
Three different names are used for the interest rate for different purposes and
perspectives: - ANSWER discount rate, required rate, and cost of capital.
What is the main purpose of charging interest? - ANSWER It allows borrowers
to pay to use the assets of another entity to accomplish their own goals.
The required rate of return is also known as the ... in the context of corporate
finance. - ANSWER hurdle rate
The... is the rate of return or compensation that an investor or a lender will accept
for investments such as stocks, bonds, or loans. - ANSWER required rate of
return
is the possibility that the realized or actual return will differ from the expected
return. - ANSWER Risk
, Three causes of inflation are increased demand for goods and services, rising
costs, and built-in inflation. - ANSWER
is the rate at which invested money grows for a certain period of time -
ANSWER The nominal rate
What is the compensation for risk given to investors called? - ANSWER Risk
premium
Which type of interest rate is the rate at which invested money grows for a certain
period of time? - ANSWER Nominal rate
Which component of an interest rate is an indicator of inflation and opportunity
cost? - ANSWER Risk-free rate
What is the name for the interest rate expressed on an annual basis? -
ANSWER Annual percentage rate
Why is the required rate of return also known as the hurdle rate? - ANSWER It
is the minimum rate that a firm must surpass to accept a project.
What is the inflation rate? - ANSWER The rate at which the average price level
of a basket of goods and services in an economy increases
, What does the risk-free rate indicate? - ANSWER Inflation and opportunity
cost
Suppose Sophia is considering a new stock investment for her retirement account.
This stock has significant risk, but is quite popular in the market. Inflation for the
next few years is expected to be 2-3% per year, and the current U.S. Treasury rates
are about 2%. How should she use this information to decide what type of return
she can expect from the stock? - ANSWER Based on the inflation rate, she
should expect this stock to provide a return higher than this for the associated risk.
What is default risk? - ANSWER A firm-specific risk that comes from the
probability of a loss resulting from a borrower's failure to repay a contractual
obligation
What is the name for the process of "spreading" money over many different
assets? - ANSWER Diversification
It is simple and helps ensure that users do not spend more than the cash that they
have available. - ANSWER It is simple and helps ensure that users do not spend
more than the cash that they have available.
Agency problem due to conflicting interests - ANSWER A company's officers
and board of directors are selling their stocks in the firm at higher prices due to
false accounting reports that made the stock seem more valuable than it truly was.
Which ethical issue is occurring in this situation?
, Bondholders are primarily interested in making sure they will be paid back. -
ANSWER Why would bondholders set bond contracts that are very strict to
deter the company from taking on risky projects?
Safe projects with a higher chance of providing sufficient compensation -
ANSWER Which kind of projects are bondholders interested in?
Consider all stakeholders involved - ANSWER What is the third step in finding
a solution to an ethical dilemma?
Aligning managers' interests with shareholders' interests - ANSWER How can
agency costs be mitigated?
To make the company's performance look good - ANSWER Why might a
manager manipulate accounting procedures?
Give a personal recommendation of the company's product while explaining its
performance relative to the market over the past several years. - ANSWER Jack
is a personal financial advisor. He is with a new client, and the client is asking him
what he recommends for her portfolio. Jack knows that his firm's investment
product performed well last year, but its performance changes from year to year—
some years it is better than the market, and some years it is not. Also, the fee to
invest in the product is higher than the fee to invest in a market index fund. If Jack
sells his company's investment product, the customer's loyalty to the company is
doubled. Which actions should Jack take?
An action that is in accordance with the laws and rules set by an authority. -
ANSWER What does the term legal describe?
QUESTIONS, LATEST UPDATE 2026/2027,
WITH CORRECT DETAILED ANSWERS
ALREADY GRADED A+ PASS GUARANTEED
What is the ratio that tells you, on average, how long it takes for a firm to collect
accounts receivable? - ANSWER Average collection period
Three different names are used for the interest rate for different purposes and
perspectives: - ANSWER discount rate, required rate, and cost of capital.
What is the main purpose of charging interest? - ANSWER It allows borrowers
to pay to use the assets of another entity to accomplish their own goals.
The required rate of return is also known as the ... in the context of corporate
finance. - ANSWER hurdle rate
The... is the rate of return or compensation that an investor or a lender will accept
for investments such as stocks, bonds, or loans. - ANSWER required rate of
return
is the possibility that the realized or actual return will differ from the expected
return. - ANSWER Risk
, Three causes of inflation are increased demand for goods and services, rising
costs, and built-in inflation. - ANSWER
is the rate at which invested money grows for a certain period of time -
ANSWER The nominal rate
What is the compensation for risk given to investors called? - ANSWER Risk
premium
Which type of interest rate is the rate at which invested money grows for a certain
period of time? - ANSWER Nominal rate
Which component of an interest rate is an indicator of inflation and opportunity
cost? - ANSWER Risk-free rate
What is the name for the interest rate expressed on an annual basis? -
ANSWER Annual percentage rate
Why is the required rate of return also known as the hurdle rate? - ANSWER It
is the minimum rate that a firm must surpass to accept a project.
What is the inflation rate? - ANSWER The rate at which the average price level
of a basket of goods and services in an economy increases
, What does the risk-free rate indicate? - ANSWER Inflation and opportunity
cost
Suppose Sophia is considering a new stock investment for her retirement account.
This stock has significant risk, but is quite popular in the market. Inflation for the
next few years is expected to be 2-3% per year, and the current U.S. Treasury rates
are about 2%. How should she use this information to decide what type of return
she can expect from the stock? - ANSWER Based on the inflation rate, she
should expect this stock to provide a return higher than this for the associated risk.
What is default risk? - ANSWER A firm-specific risk that comes from the
probability of a loss resulting from a borrower's failure to repay a contractual
obligation
What is the name for the process of "spreading" money over many different
assets? - ANSWER Diversification
It is simple and helps ensure that users do not spend more than the cash that they
have available. - ANSWER It is simple and helps ensure that users do not spend
more than the cash that they have available.
Agency problem due to conflicting interests - ANSWER A company's officers
and board of directors are selling their stocks in the firm at higher prices due to
false accounting reports that made the stock seem more valuable than it truly was.
Which ethical issue is occurring in this situation?
, Bondholders are primarily interested in making sure they will be paid back. -
ANSWER Why would bondholders set bond contracts that are very strict to
deter the company from taking on risky projects?
Safe projects with a higher chance of providing sufficient compensation -
ANSWER Which kind of projects are bondholders interested in?
Consider all stakeholders involved - ANSWER What is the third step in finding
a solution to an ethical dilemma?
Aligning managers' interests with shareholders' interests - ANSWER How can
agency costs be mitigated?
To make the company's performance look good - ANSWER Why might a
manager manipulate accounting procedures?
Give a personal recommendation of the company's product while explaining its
performance relative to the market over the past several years. - ANSWER Jack
is a personal financial advisor. He is with a new client, and the client is asking him
what he recommends for her portfolio. Jack knows that his firm's investment
product performed well last year, but its performance changes from year to year—
some years it is better than the market, and some years it is not. Also, the fee to
invest in the product is higher than the fee to invest in a market index fund. If Jack
sells his company's investment product, the customer's loyalty to the company is
doubled. Which actions should Jack take?
An action that is in accordance with the laws and rules set by an authority. -
ANSWER What does the term legal describe?
