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WGU Financial Management VBC1 Sample Questions:
1. Why might investors choose to invest in junk bonds?
A) They always outperform the stock market in terms of returns.
B) They offer guaranteed returns with minimal risk.
C) They are backed by government guarantees.
D) They offer the potential for higher returns in exchange for higher risk.
2. During the last year, Kretsmatt had the following cash flows:
* The firm had sales of $20,000 and net income of $5,000. Dividends of $1,000 were paid, and there were no changes to working capital accounts.
* The company purchased new equipment for $3,000. There were no sales of equipment and no depreciation expense recorded during the year.
* The company raised no funds through external financing and repaid no debt.
How much were Kretsmatt's net cash flows from financing for the year?
A) The firm's net cash flows from financing were an inflow of $5,000.
B) The firm's net cash flows from financing were an outflow of $3,000.
C) The firm's net cash flows from financing were an inflow of $4,000.
D) The firm's net cash flows from financing were an outflow of $1,000.
3. What is a holding cost in inventory management?
A) The time incurred until accounts receivable are collected from inventory sold
B) The discount given to customers for bulk purchases of inventory
C) The expense associated with the potential damage or price changes of inventory
D) The purchase of equipment to turn material into finished inventory
4. What does a beta higher than 1.0 for a stock indicate about its systematic risk?
A) The stock is more predictable than the market.
B) The stock is less volatile than the market.
C) The stock is more volatile than the market.
D) The stock is less risky than the market.
5. What are opportunity costs in the context of inventory management?
A) Costs incurred from the physical space used to store inventory
B) Costs of not investing capital tied up in inventory elsewhere
C) Costs related to the insurance of inventory against loss or damage
D) Costs for the labor involved in managing inventory levels
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: D | Question # 3 Answer: C | Question # 4 Answer: C | Question # 5 Answer: B |

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