WGU C214 Financial Mgmt Pass the OA

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WGU C214 Financial Mgmt Pass the OA 1.Characteristics of preferred stock includes ANS -dividends in arrears -dividends are cumulative -higher payoff claim in a BK (has first dibs in a BK) -considered "hybrid" (part stock/part bond) -no fixed maturity date -no voting rights -can skip dividend payments -dividends don't change year-after-year -used in start ups (IPO) 2.Preferred stock dividends ANS can go without payment and pay in arrears the following year 3.Characteristics of common stock are ANS -voting rights -no maturity date -corporate governance 1 / 4

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-lower payoff claim in BK -variable returns -unlimited earnings potential -earnings are in dividends & the increase in price of stock 4.New start up ventures often issue ANS preferred stock (in an IPO) 5.What stock is considered a hybrid ANS preferred stock 6.One thing common stock and preferred stock have in common is ANS both have no maturity date 7.Which type of security has voting rights ANS common stock 8.Debt covenants and restrictions help to ensure that ANS management is meeting bond and shareholder expectations NOTE covenants are promises meant to be kept 9.What is true regarding bonds ANS -when bond matures, bondholder gets lump sum back -coupon rate doesn't change 2 / 4

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-maturity is in years -PAR value is typically $1000 -Future value (same as PAR) is typically $1000 10.Bond sells at face value when ANS required rate of return is equal to the coupon rate 11.Why are bonds the primary method for raising capital ANS because bonds remove the intermediary costs NOTE IPO's require an intermediary known as a syndicate - a group of banks underwriting the security issue 12.What type of bond can be traded for stock ANS convertible bonds 3 / 4

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13.What is the interest rate for annual payments of a bond known as ANS the coupon rate NOTE coupon rate is the established interest rate for the life of the bond and will remain unchanged 14.Coupon rate is the established rate of the bond and should ANS never change 15.Debentures are ANS secured bonds NOTE debentures are a debt instrument (bond) issued to raise cash, secured against a company's assets and backed by credit, transferable by the holder, and may also be unsecured 16.Secured loan ANS has collateral like a mortgage 17.The amount repaid at the expiration date of a bond is ANS PAR value NOTE expiration date is also known as maturity date PAR (or Face Value) is

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