WGU Financial Management VBC1 Sample Questions:

1. Which factor should be considered when valuing preferred stock?

A) The stock's price in the previous year
B) The variable growth rate of dividends
C) The stock's potential for capital appreciation
D) The fixed dividend rate

2. What is the significance of Section 302 of the Sarbanes-Oxley Act (SOX)?

A) It allows companies to opt out of internal control reporting.
B) It requires management to certify the accuracy of financial reports.
C) It requires the external auditor to take responsibility for financial accuracy.
D) It relaxes the requirements for internal control.

3. A company is expected to pay a dividend of $2 next year, and dividends are expected to grow at 5% per year indefinitely. The required rate of return on the company's stock is 10%.
What is the value of the stock using the Gordon growth model?

A) $40
B) $61
C) $20
D) $15

4. A stock has a dividend per share of $5 and is expected to grow at a constant rate of 3% indefinitely. The required rate of return is 9%.
What is the value of the stock?

A) $171.67
B) $57.22
C) $100.50
D) $85.83

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

A) Fixed assets turnover
B) Working capital turnover
C) Inventory turnover
D) Current ratio

Solutions: