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WGU Financial Management VBC1 Sample Questions:
1. What distinguishes a subordinated debenture from a senior debenture?
A) A subordinated debenture is issued in a foreign currency.
B) A subordinated debenture has a lower claim on assets in the event of liquidation.
C) A subordinated debenture is secured with collateral.
D) A subordinated debenture has a higher claim on assets in the event of liquidation.
2. What is a limitation of historical mean returns when estimating the cost of common equity?
A) They apply only to large, established companies.
B) They require prediction of future dividends.
C) They are difficult to calculate.
D) They ignore market conditions and future prospects.
3. According to the capital asset pricing model (CAPM), how is a stock with a beta of 1.0 expected to perform relative to the market?
A) It will perform in line with the market.
B) It will outperform the market.
C) It will perform opposite of the market.
D) It will underperform the market.
4. What does the DuPont equation decompose return on equity (ROE) into?
A) Gross margin, fixed asset turnover, and current ratio
B) Operating margin, current asset turnover, and debt ratio
C) Pre-tax profit margin, total liabilities, and quick ratio
D) Net margin, total asset turnover, and debt-to-equity ratio
5. What is the goal of just-in-time (JIT) inventory management?
A) To minimize holding costs by reducing inventory levels
B) To extend the cash conversion cycle
C) To maximize the storage space utilized
D) To increase the quantity of on-hand inventory
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: D | Question # 3 Answer: A | Question # 4 Answer: D | Question # 5 Answer: A |
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