WGU D076 Quiz Bank (New 2024/ 2025 Update) Finance Skills for Managers| Questions and Verified Answers| 100% Correct| A Grade
QUESTION
In what
... [Show More] way are coincident indicators useful?
They are analyzed during economic shifts to provide information about the current state of the economy.
They are useful in conjunction with GDP and personal income to predict the future health of the economy.
Incorrect. GDP and personal income are both types of coincident indicators, and neither of them is used to predict future economic changes.
They help investors know which sectors of the economy to invest in.
Answer:
They are analyzed during economic shifts to provide information about the current state of the economy. Coincident indicators help analysts see the big picture of economic trends.
QUESTION
Which responsibility is a focus of the U.S. Securities and Exchange Commission?
To provide liquidity
To regulate inflation
To raise interest rates
To protect investors
Answer:
To protect investors. The responsibilities of SEC are to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation
QUESTION
Which type of financial institution provides individuals and firms access to financial markets?
Depository institutions
Credit institutions
Investment institutions
Contractual savings institutions
Answer:
Investment institutions. Investment institutions provide both individuals and firms access to financial markets.
QUESTION
Which financial institution includes entities that receive money from institutional investors and wealthy individuals to buy troubled companies to improve them and earn returns by selling them or going public?
Credit union
Commercial bank
Mutual fund
Private equity
Answer:
Private equity. This is the role of a buyout private equity firm.
QUESTION
Yield curve is which type of economic indicator?
Coincident
Lagging
Leading
Concurrent
Answer:
Leading. Leading indicators change before the economy changes.
QUESTION
About a year ago, the short-term Treasury bill had 1.54% interest and the long-term Treasury note had 2.54% interest. This week, the 1-year Treasury bill has an interest rate of 3.13%, while the 10-year Treasury note has an interest rate of 2.28%. What does this information indicate about the future economy?
It may indicate an economic downturn.
It may reflect an expectation that the economy will grow in the future along with higher inflation.
It may indicate that the economy is in a steady state.
It may indicate a decreasing unemployment rate along with higher wages.
Answer:
It may indicate an economic downturn. Since the long-term Treasury interest rate is lower than the short-term rate, it has an inverted yield curve, which may indicate an economic downturn.
QUESTION
What characterizes an ethical action?
An ethical action is based on what is right or wrong, whether or not society agrees.
An ethical action will achieve the best outcome for the decision maker.
An ethical action takes into account other individuals' values over the decision maker's own.
An ethical action is based on accepted standards of conduct.
Answer:
An ethical action is based on accepted standards of conduct.
QUESTION
Why would bondholders set bond contracts that are very strict to deter the company from taking on risky projects?
Bondholders are primarily interested in maximizing shareholder wealth.
Bondholders are primarily interested in maintaining the company's current financial status.
Bondholders are primarily interested in making sure they will be paid back.
Bondholders are primarily interested in the company paying more dividends.
Answer:
Bondholders are primarily interested in making sure they will be paid back. If a company takes on a riskier project, there is a higher probability of the project being unsuccessful, which means that the bondholders may put themselves at a higher risk of not receiving their loan back.
QUESTION
Which kind of projects are bondholders interested in?
Riskier projects that will increase the value of the company's stocks and their own financial return
Riskier projects that will provide higher returns
Safe projects with a higher chance of providing sufficient compensation
Projects that allow the company the most freedom in how it spends money
Answer:
Safe projects with a higher chance of providing sufficient compensation. Bondholders provide money for a company for a certain period of time and want companies to pay them back for their investment.
QUESTION
Which scenario is an example of an agency problem?
The owners of the company offer shares of the company to management.
A manager purchases a company car and allocates it as a company expense.
An employee takes a potential client to dinner and pays for it using the company credit card.
The management team works overtime without pay to complete financial reports.
Answer:
A manager purchases a company car and allocates it as a company expense. This is a luxury that does not improve shareholder value and costs [Show Less]