WGU D076 Objective Assessments, Pre-Assessment & Final Exams (Latest 2024/ 2025 Updates STUDY BUNDLE WITH COMPLETE SOLUTIONS) Finance Skills for Managers| Questions and Verified Answers| 100% Correct| Grade A
WGU D076 Objective Assessment V1 (Latest
2024/ 2025 Update) Finance Skills for
Managers| Questions and Verified Answers|
100% Correct| Grade A
Q: What does high inventory turnover relative to the industry and competitors indicate?
Answer:
The firm does not hold enough inventory and is making its customers wait longer to receive their
purchased goods.
Q: What is the ratio that tells you on average how long it takes for a firm to collect accounts
receivable?
Answer:
Average collection period
Q: Three different names are used for interest rate for different purposes and perspectives:
Answer:
discount rate, required rate, and cost of capital.
Q: Simple interest is the interest only on the principal, while compound interest is the interest
on the principal plus the interest on earned interest.
Answer:
Q: 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.
Q: The required rate of return is also known as the … in the context of corporate finance.
Answer:
hurdle rate
Q: 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
Q: is the possibility that the realized or actual return will differ from the expected return.
Answer:
Risk
Q: Three causes of inflation are increased demand for goods and services, rising costs, and
built-in inflation.
Answer:
Q: is the rate at which invested money grows for a certain period of time
Answer:
The nominal rate
Q: What is the compensation for risk given to investors called?
Answer:
Risk premium
Q: Which type of interest rate is the rate at which invested money grows for a certain period
time?
Answer:
Nominal rate
Q: Which component of an interest rate is an indicator of inflation and opportunity cost?
Answer:
Risk-free rate
Q: What is the name for the interest rate expressed on an annual basis?
Answer:
Annual percentage rate
Q: 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.
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WGU D076 Objective Assessment V2 (Latest
2024/ 2025 Update) Finance Skills for
Managers| Questions and Verified Answers|
100% Correct| Grade A
Q: About a year ago, the short-term Treasury bill had 1.54% interest and the long-term Treasury
note had 2.54% interest. This week, the 1-year Treasury bill has an interest rate of 3.13%, while
the 10-year Treasury note has an interest rate of 2.28%. What does this information indicate
about the future economy?
Answer:
It may indicate an economic downturn.
Q: Which term reflects a person’s beliefs about right and wrong, good and bad, or just and
unjust?
Answer:
Moral
Q: What characterizes an ethical action?
Answer:
An ethical action is based on accepted standards of conduct.
Q: Lucas is a financial advisor working for Bullzai, Inc. He is faced with a dilemma. Bullzai
has started changing its practices in order to increase profit. As a financial advisor, he is now
supposed to suggest to clients to invest in portfolios that will not do as well as the portfolios that
Bullzai is invested in. This is an accepted practice done by other businesses in the industry, and
it complies with all standards set by the government. However, Lucas knows that this practice is
not in his clients’ best interest. What type of dilemma is Lucas facing?
Answer:
Moral
Q: Which type of error would result in a set repercussion or penalty given by the government?
Answer:
Legal
Q: Nora is an investment manager, which means that she is paid to invest other people’s money.
To meet her goal for the month, she is seeking to invest money from clients in an investment that
is risky but potentially has a higher return. What about this situation represents an ethical
dilemma?
Answer:
Nora is considering investing in a risky asset just to meet her monthly goal.
Q: What are the effects of attempting to maximize shareholder value for a business in an
unethical way?
Answer:
It often leads to decreased shareholder value for the business.
Q: Endothon Company has decided to move its production from the United States to a foreign
country. Which situation below would constitute an un- ethical action by the company?
Answer:
Saving money by paying inadequate wages to workers overseas
Q: Why would bondholders set bond contracts that are very strict to deter the company from
taking on risky projects?
Answer:
Bondholders are primarily interested in making sure they will be paid back.
Q: Which kind of projects are bondholders interested in?
Answer:
Safe projects with a higher chance of providing sufficient compensation
Q: Which scenario is an example of an agency problem?
Answer:
A manager purchases a company car and allocates it as a company expense.
Q: How can agency costs be mitigated?
Answer:
Aligning managers’ interests with shareholders’ interests
Q: What is the third step in finding a solution to an ethical dilemma?
Answer:
Consider all stakeholders involved
Q: What does the term legal describe?
Answer:
An action that is in accordance with the laws and rules set by an authority.
Q: 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?
Answer:
Give a personal recommendation of the company’s product while explaining its performance
relative to the market over the past several years.
Q: Why might a manager manipulate accounting procedures?
Answer:
To make the company’s performance look good
Q: Which situation is an example of an agency problem?
Answer:
Managers follow their own interests instead of the owners’ interest.
Q: A company is trying to finance a project with a mortgage loan from a bank. The company’s
assessment of the project indicates that the company may experience several years of loss until
the project becomes profitable. This means that the company might lose its ability to pay back
the loan and the interest on the mortgage. What action might the bank take to protect its interest?
Answer:
Set a strict covenant that the company cannot easily achieve.
Q: Which statement correctly contextualizes what a return is?
Answer:
A return is the gain or loss on an investment over some period of time.
Q: What is an expected return?
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WGU D076 Pre- Assessment (Latest 2024/
2025 Update) Finance Skills for Managers|
Questions and Verified Answers| 100%
Correct| Grade A
Q: Suppose an individual does not eat chocolate because eating chocolate goes against his
personal beliefs. Which type of standard is this?
-Ethical
-Moral
-Legal
-Financial
Answer:
Moral
Q: Which action is based upon moral standards?
-Although there is no company policy regarding it, a financial manager chooses not to accept
gifts from the company’s clients to ensure that she does not create a conflict of interest.
-Since it is generally accepted in the company that no personal information about clients should
be released without written permission, a financial manager denies the request for a third party to
access its data.
-As mandated by government regulations, a financial manager files a registration statement with
the U.S. Securities and Exchange Commission (SEC) before offering equity securities for sale.
-As outlined in the company’s policies, a financial manager hires a third-party entity to review all
annual report filings to ensure they are compliant with applicable generally accepted accounting
principles (GAAP).
Answer:
Although there is no company policy regarding it, a financial manager chooses not to accept gifts
from the company’s clients to ensure that she does not create a conflict of interest.
Q: What should a potential bondholder (lender) do to prevent a company (borrower) from
taking on risky projects?
-Separate owners from management so their interests do not conflict
-Encourage manipulation of accounting procedures to optimize the company’s profit
-Set strict covenants that the company cannot uphold if it chooses a risky project
-Release managers who do not attempt to maximize immediate shareholder value
Answer:
Set strict covenants that the company cannot uphold if it chooses a risky project
Q: What is the term for an individual’s beliefs concerning what is and is not acceptable to
personally do?
-Ethics
-Honesty
-Laws
-Morals
Answer:
Morals
Q: Which factor contributes to the inflation of the prices of goods and services over time?
-Increase in demand for goods and services
-Decrease in costs of production
-Increase in purchasing power of goods and services
-Decrease in employee demand for higher wages
Answer:
Increase in demand for goods and services
Q: Why can compounding interest be a good tool but also a significant detriment?
-Compounding interest can be a good tool to understand opportunity cost, but it is a detriment
because it does not take risk into account.
-Compounding interest can be a good tool because it summarizes the required return, but it is a
detriment because it requires a larger cost of capital.
-Compounding interest can be a good tool to understand the time value of money, but it is a
detriment because it does not take inflation into account.
-Compounding interest can be a good tool because it allows a lender to gain interest on interest,
but it is a detriment because it causes a borrower to pay interest on interest.
Answer:
Compounding interest can be a good tool because it allows a lender to gain interest on interest,
but it is a detriment because it causes a borrower to pay interest on interest.
Q: Which component of the required rate of return takes into account the loss of potential gain
from other alternatives?
-Hurdle rate
-Opportunity cost
-Risk
-Inflation
Answer:
Opportunity Cost
Q: How is inflation calculated?
-Inflation is determined by the federal government at a target rate of 2% a year.
-Inflation is calculated by determining the rate at which the average price level of particular
goods and services increases over a period of time in an economy.
-Inflation is calculated by determining the rate at which the demand for particular goods and
services has increased over a period of time in an economy.
-Inflation is built into the economy and will rise as employees receive salary raises.
Answer:
Inflation is calculated by determining the rate at which the average price level of particular goods
and services increases over a period of time in an economy.
Q: Based on the following information about the stocks of several companies, which stock
displays the greatest amount of risk?
Stock A: Return = 22.22%, Standard Deviation = 9.99%
Stock B: Return = 15.05%, Standard Deviation = 7.35%
Stock C: Return = 38.83%, Standard Deviation = 4.54%
Stock D: Return = 5.69%, Standard Deviation = 5.32%
-Stock A
-Stock B
-Stock C
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WGU D076 Quiz Bank (Latest 2024/ 2025
Update) Finance Skills for Managers|
Questions and Verified Answers| 100%
Correct| Grade A
Q: Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario?
Making an investment decision
Managing financial investments
Managing working capital
Making a financing decision
Answer:
Making a financing decision. Since the project has already been approved, Hannah is trying to
find a way to finance the investment and considering its capital structure.
Q: Maria and Mateo are setting financial goals. They decide that they need to save $200 each
month to reach their goal of taking their children to visit their grandparents in Spain next
summer. What is the objective of setting such a goal?
To minimize personal expenses
To set priorities in personal finances
To maximize individual utility
To make personal finances predictable
Answer:
To maximize individual utility. While everyone has different personal financial goals, the
objectives of such goals is to maximize individual utility.
Q: Which professional works with individuals to help them achieve their financial goals?
Commercial banker
Corporate financial analyst
Private equity manager
Financial planner
Answer:
Financial planner. Professional financial planners work with individuals to help them achieve
their financial goals.
Q: Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he
is still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan.
In this scenario, what is Omar doing?
Budgeting
Investing to achieve a goal
Financing a goal
Assessing a financial goal
Answer:
Financing a goal. He has already made a decision to purchase the car and is now deciding on
financing options.
Q: What are the purposes of financial markets?
To provide liquidity and determine prices
To affect the distribution of income for investors
To maintain fair, orderly, and efficient markets
To willingly take risk and capture returns
Answer:
To provide liquidity and determine prices. The purposes of financial markets are to provide
liquidity and to determine prices.
Q: Leverage Multiplier
Answer:
leverage multiplier of 2 is less than the industry average of 3.2. This implies that the firm is more
conservatively financed than much of the industry (or in other words, it uses less debt than other
companies).
Q: In which financial market are securities such as stocks and bonds are traded after their initial
issuance?
Secondary market
Primary market
Initial market
Dealer market
Answer:
Secondary market. Financial securities are first sold in the primary financial market and then
traded among investors in the secondary financial market.
Q: What kind of market primarily allows institutions to borrow and lend in the short term?
Futures and options markets
Capital market
Primary market
Money market
Answer:
Money market. Assets in money markets are typically highly liquid and intended for use within a
year or less.
Q: A local start-up company just hit its five-year anniversary and is planning an initial public
offering sometime this year. In order to issue public stock, which market will the company use?
Dealer market
Futures and options market
Secondary market
Primary market
Answer:
Primary market. When a company issues stock for the first time to raise capital, shares must
initially be sold through a primary market.
Q: What is the primary role of financial institutions?
To deal with financing, capital structuring, and investment decisions
To conduct financial transactions such as investments, loans, and deposits
To provide liquidity when trading financial assets
Incorrect. This is the role of financial markets.
To provide financial information to the stakeholders of a business
Answer:
To conduct financial transactions such as investments, loans, and deposits. Financial institutions
conduct transactions to circulate money.
Q: What is a depository institution?
An institution that provides individuals and firms access to financial markets
An institution that has a goal to maximize owner or shareholder wealth
An institution that accepts and pays interest on deposits of money, as well as extends loans
An institution that is a financial intermediary that raises capital on a contractual basis
Answer:
An institution that accepts and pays interest on deposits of money, as well as extends loans. This
is the definition of a depository institution. Examples include banks and credit unions.
Q: Which financial institution ensures that a nation’s economy remains healthy by controlling
the amount of money circulating in the economy?
Commercial bank
Central bank
Mutual fund
Credit union
Answer:
Central banks control the supply of money in the economy.
Q: How do insurance companies pay policyholders when a claim is made?
They withdraw funds from their corporate savings account.
They withdraw funds from policyholders’ premium accounts.
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WGU D076 Exam Review (Latest 2024/ 2025
Update) Finance Skills for Managers|
Questions and Verified Answers| 100%
Correct| Grade A
Q: You want to buy a house, so you obtain a mortgage for which you can afford the monthly
payments. What process have you engaged in as part of your financial decision-making?
Answer:
Financing
Q: What area of finance involves deciding which assets to invest in to create wealth in the
future?
Answer:
Investments
Q: Hannah is the financial manager of a firm. A project that she has recommended has been
approved and will cost $5 million. Since the company does not have enough cash on reserve,
Hannah must figure out how to raise enough money to start the project. She can choose whether
to issue new bonds, new stocks, a mortgage loan, or some combination of those options. What
task is Hannah performing in this scenario?
Answer:
Making a financing decision
Q: Maria and Mateo are setting financial goals. They decide that they need to save $200 each
month to reach their goal of taking their children to visit their grandparents in Spain next
summer. What is the objective of setting such a goal?
Answer:
To maximize individual utility
Q: Which professional works with individuals to help them achieve their financial goals?
Answer:
Financial planner
Q: Omar is about to purchase a new car for $30,000. He knows he wants to buy the car, but he
is still trying to decide how to pay for it. He has barely over $30,000 in his bank account. He can
either take out an auto loan from a bank or use a mix of cash and an auto loan.
In this scenario, what is Omar doing?
Answer:
Financing a goal
Q: What are the purposes of financial markets?
Answer:
To provide liquidity and determine prices
Q: In which financial market are securities such as stocks and bonds are traded after their initial
issuance?
Answer:
Secondary market
Q: What kind of market primarily allows institutions to borrow and lend in the short term?
Answer:
Money market
Q: A local start-up company just hit its five-year anniversary and is planning an initial public
offering sometime this year. In order to issue public stock, which market will the company use?
Answer:
Primary market
Q: What is the primary role of financial institutions?
Answer:
To conduct financial transactions such as investments, loans, and deposits
Q: What is a depository institution?
Answer:
An institution that accepts and pays interest on deposits of money, as well as extends loans
Q: Which financial institution ensures that a nation’s economy remains healthy by controlling
the amount of money circulating in the economy?
Answer:
Central bank
Q: How do insurance companies pay policyholders when a claim is made?
Answer:
They use returns from stocks and bonds.
Q: Which type of financial institution deals mainly with providing for retirement through
employers?
Answer:
Pension fund
Q: A large corporation is looking to merge with another large corporation. Which financial
institution can help them do this?
Answer:
Investment bank
Q: Unemployment rate is which type of economic indicator?
Answer:
Lagging
Q: The Federal Reserve sometimes adjusts the interest rate at which commercial banks can
borrow from it. What is the purpose of adjusting the interest rate?
Answer:
To regulate inflation and unemployment
Q: What would an inverted yield curve signal?
Answer:
It may indicate an economic downturn.
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WGU D076 Final Exam (Latest 2024/ 2025
Update) Finance Skills for Managers|
Questions and Verified Answers| 100%
Correct| Grade A
Q: Systematic Risk (market risk)
Answer:
Inherent, unavoidable through firm actions that impacts all firms. These risks are nondiversifiable and are higher risk. (affected by economic changes, trade tariffs, etc)
Q: Non-systematic risk
Answer:
risk that can be eliminated by diversification and has no impact on other firms, its only specific
to a single firm.
Q: Which ratio helps an analyst evaluate whether a company can cover its short-term
obligations?
Answer:
Current Ratio
Q: what does the DuPont framework indicate about return on assets?
Answer:
All returns are based on the firm’s profitability and efficiency.
Q: An investment analyst is concerned about a construction company’s abil- ity to sell its
inventory to meet current obligations, because much of the inventory (commercial buildings) it
builds and sells takes longer than a year to construct.
Which ratio should this analyst use to consider the effect of the firm’s inven- tory on the firm’s
ability to meet current obligations?
Answer:
Quick ratio
Q: Dispersing assets geographically instead of concentrating them all in one spot is referred to
as
Answer:
Risk Separation
Q: Spreading money over different assets is referred to as
Answer:
Risk Diversification
Q: is managing risk by not performing an activity that carries risk. It minimizes
exposure to vulnerabilities and is achieved by implementation of policy, procedure, training, and
technology.
Answer:
Risk Avoidance
Q: When ratios change in a company, how can it be useful?
Answer:
It allows you to find reasons behind the change
Q: How are ratios used?
Answer:
Benchmarking, and calculating desired ratios, then contrasting them against a comparison group
of ratios.
Q: Liquidity matters to who?
Answer:
Suppliers
Q: are how well the company uses its assets to generate cash or sales, showing the
firms operational efficiency and profitability.
Answer:
Activity Ratios (efficiency ratios)
Q: describes in what proportions the firm uses equity and debt to finance their assets.
Its used to evaluate whether a company can stay financially healthy long term.
Answer:
Leverage Ratios
Q: A company with a higher Quick Ratio is viewed as
Answer:
having greater ability to meet short term obligations
Q: How is a quick ratio helpful?
Answer:
Its helpful for companies or industries that have a lot of inventory or take longer to liquidate
inventory
Q: What does an answer of 1 in a current ratio indicate?
Answer:
It indicates you have exactly enough current assets to cover current liabilities.
Q: An employee was recently hired as a financial analyst and asked to create a cash budget for
the employee’s division for the next year.
Which component should the employee exclude from the budget?
Answer:
Purchase of equipment that will be bought in three years
Q: What are the benefits of using the traditional envelope method to track cash flows?
Answer:
It is simple and helps ensure that users do not spend more than the cash that they have available.
Q: A company that manufactures televisions must obtain financing to in- crease the company’s
inventory levels. A manager at the company knows that current investment markets are tight, and
it may be difficult for the company to obtain additional financing for the next year. The manager
wants to propose
a way for the firm to reduce its discretionary financing needed (DFN).What should the manager
suggest to reduce next year’s DFN?
Answer:
Lower the amount of dividends that are paid out to shareholders next year
Q: What is the term for the rate that allows a firm to maintain its present financial ratios without
issuing new equity or increasing debt?
Answer:
Sustainable growth rate
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WGU D076 Finance Skills for Managers
Exam (Latest 2024/ 2025 Update) | Questions
and Verified Answers| 100% Correct| Grade
A
Q: A person who loans a corporation money by buying debt securities.
Answer:
Bond- holders
Q: An area of finance that deals with sources of funding, the capital structure of corporations,
the actions that managers take to increase the value of
the firm to its owners, and the tools and analysis used to allocate financial resources.
Answer:
Business Finance
Q: The reduction in sales of a company’s own products due to introduction of another similar
product.
Answer:
Cannibalization
Q: A model used to determine the risk-return relationship for an asset.
Answer:
Capital
Asset Pricing Model (CAPM)
Q: Metrics and calculations used to determine whether a project or asset will add value and be a
worthwhile investment.
Answer:
Capital Budgeting Criteria
Q: The process of evaluation and planning for purchases of long-term assets.-
Answer:
Capital Budgeting
Q: The sum of money invested in a business to purchase long-term assets to further its
objective of maximizing owner wealth.
Answer:
Capital Investment
Q: A type of financial market used for long-term assets that are held for greater than one year.
Answer:
Capital Markets
Q: The mixture of debt and equity used to finance a firm.
Answer:
Capital Structure
Q: A financial asset that can be used by a firm or individual. Examples of capital may be
machinery or cash held by a firm.
Answer:
Capital
Q: When a limited amount of funds are available.
Answer:
Capital-constrained Environ- ment
Q: A plan for controlling cash inflows and outflows business to balance income with
expenditures.
Answer:
Cash Budgets
Q: Managing the day-to-day finance operations of a firm.
Answer:
Cash Management
Q: Ensure that a nation’s economy remains healthy by controlling the amount of money
circulating in the economy.
Answer:
Central Banks
Q: A type of stock that represents equity in a firm and confers the right to vote at shareholder
meetings.
Answer:
Common Stock
Q: The interest on the principal plus the interest on earned interest.
Answer:
Com- pounding Interest
Q: Finding a future value given a present value.
Answer:
Compounding
Q: A debt instrument that is issued by a corporation in order to raise capital.-
Answer:
Corporate Bonds
Q: The system of rules, practices, and processes by which a firm is directed and controlled.
Answer:
Corporate Governance
Q: The measure of the relationship between two variables that move in rela- tion to each other.
Answer:
Correlation
Q: The cost to a firm to use an investor’s capital; see interest rate.
Answer:
Cost of
Capital
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