Financial-Management by WGU Valid Free Exam Practice Test

Question 1

What costs are considered part of an asset's initial investment?

A. Market research B. Delivery and installation C. Depreciation D. Discounted salvage value

Correct Answer: B

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Question 2

How does asset tangibility affect a company's capital structure?

A. By influencing the company's decision to enter new markets B. By influencing the company's ability to secure debt financing C. By influencing the company's dividend payout ratio D. By influencing the company's ability to issue convertible bonds

Correct Answer: B

Question 3

What is the significance of Section 302 of the Sarbanes-Oxley Act (SOX)?

A. It requires management to certify the accuracy of financial reports. B. It allows companies to opt out of internal control reporting. C. It relaxes the requirements for internal control. D. It requires the external auditor to take responsibility for financial accuracy.

Correct Answer: A

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Question 4

What are opportunity costs in the context of inventory management?

A. Costs related to the insurance of inventory against loss or damage B. Costs of not investing capital tied up in inventory elsewhere C. Costs for the labor involved in managing inventory levels D. Costs incurred from the physical space used to store inventory

Correct Answer: B

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Question 5

A stock has a dividend per share of $5 and is expected to grow at a constant rate of 3% indefinitely. The required rate of return is 9%.
What is the value of the stock?

A. $100.50 B. $171.67 C. $57.22 D. $85.83

Correct Answer: D

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Question 6

Considering the fundamental relationships of the balance sheet, how can a company's assets increase without a corresponding rise in liabilities?

A. The company could increase the amount of cash it pays out as dividends. B. The company could finance the assets by increasing owners' equity. C. The company could finance the assets by restructuring its long-term debt. D. The company could increase the amount of depreciation it recognizes.

Correct Answer: B

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Question 7

Why might a firm's net income not equal its cash flows from operations for a period?

A. Cash flows from operations are calculated for tax purposes only and may not align with actual income earned. B. Net income may reflect noncash charges and revenue recognition that differ from a firm's actual cash flows. C. Net income represents profits from investing activities only, while cash flows from operations reflect all earnings. D. Net income projects future earnings, while cash flows from operations deal with past cash transactions.

Correct Answer: B

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Question 8

How does the capital asset pricing model (CAPM) assist in investment decisions?

A. It focuses solely on dividend-paying stocks. B. It helps in assessing the risk-return trade-off of a stock. C. It guarantees a certain return on investments. D. It predicts the exact future price of stocks.

Correct Answer: B

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Question 9

What is the main responsibility of the Financial Industry Regulatory Authority (FINRA)?

A. Regulating the Federal Reserve B. Regulating brokerage firms and exchange markets C. Overseeing the issuance of currency D. Insuring investor deposits

Correct Answer: B

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WGU Financial Management VBC1 - Financial-Management Exam Practice Test