WGU C214 Final Exam Questions and Answers Already Graded A Coupon Rate The interest rate that a company promises to pay on bonds
Market Rate The interest rate on other comparable bonds
Par Value The amount payable on maturity of the bond
Market rate Same as YTM - Yield to Maturity
Gordon Growth...
WGU C214 Final Exam Questions and
Answers Already Graded A
Coupon Rate ✔✔The interest rate that a company promises to pay on bonds
Market Rate ✔✔The interest rate on other comparable bonds
Par Value ✔✔The amount payable on maturity of the bond
Market rate ✔✔Same as YTM - Yield to Maturity
Gordon Growth Model ✔✔Assumes stable growth rates and does not incorporate risk
CAPM Model ✔✔Allows to determine expected return on stocks and incorporates risk
How do public companies maximize shareholder value? ✔✔By maximizing Earnings Per Share
How do private companies maximize shareholder value? ✔✔By keeping control within the
company
Positive credit rating has what effect on capital? ✔✔Lowers cost of capital
What is cash flow from operating activities? ✔✔It is cash flow generated for sale of products and
services
What is the formula for retained earnings? ✔✔Ending retained earnings=Beginning retained
earnings + Net Income = Dividends
, Is depreciation and salvage value on an asset precise or is it an estimate? ✔✔It is an estimate
What is an example of accounting difference ✔✔Companies using different accounting methods
What is an example of a timing difference? ✔✔Companies using different fiscal years
Do stock holders or bond holders have voting rights? ✔✔Stock holders have voting rights
What factors are considered for the initial outlay of a new investment? ✔✔Purchase price of new
equipment, shipping costs, and investment in working capital
What is the risk associated with debt financing? ✔✔Too much debt can lead to bankruptcy
What are inventory related costs? ✔✔Product costs, storage costs, and opportunity costs
What statements are required to be filed with the SEC ✔✔Annual audited financial statements
What are the issues with understanding foreign financial statements? ✔✔Foreign financial
statements use international financial reporting standards and they are different from US
accounting standards
What does cash flow from investing activities measure? ✔✔It measure investments in long term
assets such as building, equipment, and machinery
What does the efficient frontier measure? ✔✔It maximizes expected return for a given level of
risk
What is the objective of portfolio diversification? ✔✔The objective is to reduce risk
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