WGU C214 Pre-Assessment Financial Management 2023/ 2024 Exam| Questions and Verified Answers| Grade A+
WGU C214 Pre-Assessment Financial
Management 2023/ 2024 Exam| Questions
and Verified Answers| Grade A+
Q: A firm has a ROE (return on equity) of 0.27 and the industry average ROE is 0.24. Which
conclusion would an analyst draw when comparing the firm to the industry?
Answer:
The firm is generating higher returns to owners than the industry.
Q: What must have taken place for a firm to recognize revenue, in order for the firm to comply
with the accrual accounting rules?
Answer:
The product must have been delivered.
Q: A teacher won $100,000 and invests this money for 5 years at an interest rate of 4%
(compounded
annually).
How much will the teacher have in principal and interest at the end of the 5 years?
Answer:
$121,665
Q: An accountantis 40 years old with an anticipated retirement age of 70 years old. The
accountant plans to
save $6,000 per year at the end of the next 30 years to fund retirement.
Answer:
$336,510
Q: An investor deposits $2,000 per year (beginning today) for 10 years in a 4% interest bearing
account. The
last cash flow is received 1 year prior to the end ofthe tenth year.
What is the investor’s future balance after 10 years?
Answer:
$24,973
Q: What is the par value (face value) of a bond?
Answer:
The sum of money that the corporation promises to pay upon expiration of the bond.
Q: A broker is considering purchasing common stock in a company that has average but
consistent operating
performance.
Which factor should lead the broker to purchase shares in this company?
Answer:
The current price of the stock is 25% below its intrinsic value.
Q: A broker is considering buying a dividend-paying stock. The dividend will be paid atthe end
of the year.
The analyst consensus is the stock will be worth $36 in one year. The company pays a $2.25
annual
dividend (ex dividend date is not a consideration,the broker will receive the full $2.25), and the
broker
expects a 12% rate of return
What is the highest price the broker should be willing to pay for the stock?
Answer:
$34.15
Q: A person buys shares of a company at $45. They recently paid a $2 annual dividend which is
expected to
grow by 10% per year.
What is the expected return per year?
Answer:
14.9%
Q: Which investment option is less desirable for a prudent investor?
Answer:
Quadrant 4, bottom left, 3/4 to right side. Also E. for answer.
Q: The market rate of return is 9%. The face value ofthe bond is $1000,the coupon rate is 9%
with annual
compounding, and the bond matures in 10 years.
What is the value of the bond?
Answer:
$1,000
Q: Which statement is true about fluctuations in bond prices?
Answer:
When the market interest rates fluctuate, the required rate of return equals the bond coupon rate.
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