WGU D076 Test Answers

D076 Test Answers 4.7 (20 reviews) Students also studied Terms in this set (48) Western Governors UniversityBUS 2040 Save Finance Skills for Managers - D076 58 terms martinatraPreview

Pre-OA: Question 59

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Teacher Dan In which way is accounting different from finance?Accounting is backward looking, while finance is focused on the future.Accounting is focused on allocating capital, while finance is focused on bringing in capital.Accounting is about budgeting, saving, and borrowing, while finance is about investing, forecasting, and lending.Accounting is backward looking, while finance is focused on the future.What is the main question that both individuals and companies must consider when making financial decisions to reach a goal?Will the benefits of the action outweigh the costs?Will this decision require debt or equity financing?Will utility be maximized through this decision?Will the benefits of the action outweigh the costs?A financial manager at a company is trying to determine whether to issue new stocks or new bonds to cover the costs of a project the company is doing the next year.Which main task in business finance is this situation an example of?Making financing decisions Making investment decisions Managing interdepartmental loans Making financing decisions

How can investing help a person reach personal financial goals?It provides access to potential revenue or increases in value to help meet goals faster.It ensures money is placed in a safe, risk-free, and easily accessible financial asset.It helps a person understand how money was spent previously in order to reliably predict future expenses.It provides access to potential revenue or increases in value to help meet goals faster.A sign company is planning to have an initial public offering (IPO). In which type of market will its stock first be sold to the public?Efficient market Secondary market Money market Primary market Primary market Which type of economic indicator changes after the economy changes and helps identify trends in the long term?Yield curve indicator Leading indicator Coincident indicator Lagging indicator Lagging indicator How does an investment institution, such as a mutual fund, facilitate the circulation of money in the economy?By insuring deposits in investment accounts up to $250,000 to promote public confidence By raising capital on a contractual basis, such as an insurance contract By providing individuals and firms access to financial markets to buy or sell financial securities By providing individuals and firms access to financial markets to buy or sell financial securities Which type of economic indicator is used by governments and policymakers to implement or alter policies in an effort to avoid or minimize the effects of an economic downturn?Correlated indicator Coincident indicator Lagging indicator Leading indicator Leading indicator What should a potential bondholder (lender) do to prevent a company (borrower) from taking on risky projects?Set strict covenants that the company cannot uphold if it chooses a risky project Encourage manipulation of accounting procedures to optimize the company's profit Separate owners from management so their interests do not conflict Set strict covenants that the company cannot uphold if it chooses a risky project

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 Decrease in employee demand for higher wages Increase in demand for goods and services Why can compounding interest be a good tool but also a significant detriment?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.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 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.How is inflation calculated?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 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.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 Stock D Stock A. The higher the Standard Deviation the higher the risk.Which type of ratio should be used to examine the cost efficiency of a firm's production?Liquidity Market Efficiency Profitability Profitability

What is the process of analyzing financial data with ratios to compare a firm's performance to competitors?Evaluating Auditing Valuing Benchmarking Benchmarking Which action will increase the return on equity of a firm?Increasing the liquidity of the firm Increasing the asset usage efficiency of the firm Decreasing the debt financing of the firm Decreasing the profitability of the firm Increasing the asset usage efficiency of the firm Which principle of ratio analysis means that ratios are open for analyst interpretation, are not governed by rules, and allow creativity to work according to a particular company or asset?Focus Flexibility Standardization Evaluation Flexibility As an active investor, Maria is analyzing her portfolio to decide if there are any stocks she should remove from her pool of financial securities. A company she has invested in, Quiet Flag Industries, just released its annual report.Which kind of method should Maria use to see if the company has improved?Progress measurement Trend analysis Cross-sectional analysis Focus analysis Trend analysis Which type of ratios are banks and lenders most concerned about?Profitability Activity Liquidity Efficiency Liquidity Which ratio helps an analyst evaluate whether a company can cover its short-term obligations?Current ratio Net margin Return on equity Market-to-book ratio Current ratio