WGU Financial Management VBC1 (Financial-Management) Free Practice Test

Question 1

A company has just increased its dividend payout ratio.
What effect will this have on the company's sustainable growth rate?

A. The sustainable growth rate will remain the same because the increase in the dividend payout ratio will be offset by a decrease in return on equity.

B. The sustainable growth rate will increase.

C. The sustainable growth rate will either increase or decrease depending on the result of the change in dividend payouts on the plowback ratio.

D. The sustainable growth rate will decrease.

Correct Answer: D

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Question 2

Which group does the Securities and Exchange Commission (SEC) work with closely to oversee broker- dealers?

A. The Financial Industry Regulatory Authority (FINRA)

B. The Federal Deposit Insurance Corporation (FDIC)

C. The Commodity Futures Trading Commission (CFTC)

D. The Federal Reserve

Correct Answer: A

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Question 3

What is the dividend yield of a stock that pays annual dividends of $4 per share and has a current market price of $80?

A. 10%

B. 5%

C. 20%

D. 2.5%

Correct Answer: B

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Question 4

What is a primary goal of managing accounts receivable through credit policies?

A. To transition all sales to cash-only transactions

B. To maximize sales regardless of cash flow impact

C. To eliminate accounts receivable entirely

D. To balance customer convenience with the firm's cash flow needs

Correct Answer: D

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Question 5

Which ratio measures a company's ability to convert its receivables into cash?

A. Working capital ratio

B. Receivables turnover

C. Current ratio

D. Inventory turnover

Correct Answer: B

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Question 6

Using the dividend discount valuation information provided, what is the intrinsic value of the stock ?

A. $52.40

B. $60.00

C. $66.55

D. $75.80

Correct Answer: C

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Question 7

How does a competitive sale of bonds work?

A. Underwriters negotiate directly with the issuing firm on price and interest rate.

B. Underwriters submit bids, and the firm selects one based on price and interest rate.

C. The underwriter purchases bonds at a fixed rate determined by the government.

D. The underwriter is selected by the issuing firm based on a thorough interview process.

Correct Answer: B

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Question 8

Which characteristic is unique to preferred stock?

A. Voting rights in company decisions

B. Fixed dividend payments for stockholders

C. Ownership equity in the company

D. Potential for capital appreciation

Correct Answer: B

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Question 9

Which ratio indicates the ratio of a company's current assets relative to its current liabilities?

A. Fixed assets turnover

B. Current ratio

C. Inventory turnover

D. Working capital turnover

Correct Answer: B

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WGU Financial Management VBC1 (Financial-Management) Free Practice Test