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C 201 / C201 Pre-Assessment V2 (Latest Update 2025 / 2026) Business Acumen | Questions and Answers | Grade A | 100% Correct (Verified Answers) - WGU

Question:

Which two risks does a firm face by funding the purchase of long-term assets with short-term funding sources?

Choose 2 answers

• Volatility of interest rates
• Faster depreciation of long-term assets
• Negative credit rating
• Frequent renewals

Answer:

Volatility of interest rates

Frequent renewals

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Question:

Which funding source should a firm use if it wishes to secure long-term financing while retaining all of its equity?

• Venture capital
• Public stock sale
• Long-term commercial bank loan
• Private equity fund

Answer:

Long-term commercial bank loan

Question:

What should a firm do to manage the risk of using leverage when exploring long-term funding options?

• Ensure that earnings remain larger than interest payments
• Capitalize returns to shareholders to maximize retained earnings on

invested funds

• Hedge against borrowed funds with an equal amount of equity capital
• Subordinate dividends to interest payments to creditors

Answer:

Ensure that earnings remain larger than interest payments

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Question:

Which three characteristics make commercial paper a low-risk, attractive source of short-term funding for a business?

Choose 3 answers

• It can make large amounts of money available.
• It carries interest rates that are 1 to 2 percent less than bank loans.
• It can be issued by virtually any business.
• It is sold in multiples as low as $10,000.
• It has a maturity that ranges between 1 and 270 days.

Answer:

It can make large amounts of money available.

It carries interest rates that are 1 to 2 percent less than bank loans.

It has a maturity that ranges between 1 and 270 days.

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Question:

Which financial statement should an investor examine to identify the liabilities of a firm?

• The balance sheet
• The income statement
• The statement of owner's equity
• The statement of cash flows

Answer:

The balance sheet

Question:

A company wishes to determine if it should fund a project with bonds or equity.

Which business concept would it most likely use to assist in the decision?

• Leverage
• Financial plan
• Liquidity
• Monetary policy

Answer:

Leverage

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