WGU C214 Interactive Concepts Quiz 1-30

1.  The goal of a corporation is to

• a.  Maximize profit

• b.  Serve societal goals

• c.  Maximize stock price

• d.  Sell the best product

2.  What does Beta measure?

• a.  The yield on the S&P 500

• b.  The relative riskiness of an individual stock

• c.   Indicates the market value of the stock

• d.  Stocks to avoid purchasing

3.  What determines the prices of financial securities?

• a.  PV of expected cash flow to investors

• b.  Firm's earnings per share (PE)

• c.  Financial analyst recommendations

• d.  Financial Statements

4.  Which does not affect the required yield on a bond?

• a.  Riskiness of the issuer

• b.  Collateralization

• c.  Treasury yields

• d.  Coupon rate

5.  If the yield of a bond is higher than the coupon rate, what is the price?

• a.  Premium price

• b.  Par price

• c.  Discount price

• d.  Secondary market price

6.  Financial leverage causes

• a.  Lower dividends

• b.  Event risk

• c.  Increased operating costs

• d.  Increased profit volatility

7.  To induce an investor to buy a risky security, the investor must receive

• a.  A Prospectus

• b.  Collateral 

• c.  A Risk Premium

• d.  Favorable tax treatment

8.  Junk bonds are those whose rating is below

• a.  AAA

• b.  AA

• c.  A

• d.  BBB

9.  Diversification protects against

• a.  Recession

• b.  Exchange rate risk

• c.  Individual firm risk

• d.  Inflation risk

10.   Why is stock valuation so difficult?

• a.  Interpreting financial statements

• b.  Estimating future profits

• c.  Finding price quotes

• d.  None of the above.