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WGU Financial Management VBC1 Sample Questions:
1. How does the use of historical returns to estimate the cost of common equity differ from the Gordon growth model?
A) It uses market risk as the primary factor.
B) It is based on past stock performance.
C) It focuses on the company's dividend policy.
D) It considers the future growth rate of dividends.
2. What is the goal of just-in-time (JIT) inventory management?
A) To minimize holding costs by reducing inventory levels
B) To increase the quantity of on-hand inventory
C) To maximize the storage space utilized
D) To extend the cash conversion cycle
3. To answer this question, refer to the cash flow worksheet and the internal rate of return (IRR) calculations.
The hospital is only interested in accepting projects with an IRR that exceeds 11%. Assuming the hospital has sufficient capital for both projects and is willing to invest for up to 10 years, which project(s) would the hospital accept?
A) Neither Project A nor Project B
B) Project B
C) Project A
D) Both Project A and Project B
4. How does company size relate to capital structure in terms of access to financing options?
A) Larger companies are more reliant on internal financing.
B) Larger firms often have broader access to both debt and equity markets.
C) Smaller firms have better access to secured loans.
D) Smaller companies are better able to access lower costs of capital for debt.
5. How does asset tangibility affect a company's capital structure?
A) By influencing the company's dividend payout ratio
B) By influencing the company's ability to issue convertible bonds
C) By influencing the company's ability to secure debt financing
D) By influencing the company's decision to enter new markets
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: A | Question # 3 Answer: D | Question # 4 Answer: B | Question # 5 Answer: C |
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