Free WGU Financial-Management Exam Questions

Become WGU Certified with updated Financial-Management exam questions and correct answers

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Total 84 Questions | Updated On: Sep 23, 2026

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Question 1

What is a drawback of using the Gordon growth model for estimating the cost of common equity?

A : It emphasizes short-term financial performance.

B : It requires extensive market data analysis.

C : It is too complex for general use.

D : It applies only to companies with stable dividend policies.

Answer: D

Question 2

What is the relationship between the length of the cash cycle and the amount of cash a firm needs to operate?

A : A longer cash cycle reduces the need for operational cash due to increased efficiency.

B : The cash cycle length has no impact on operational cash needs.

C : Shorter cash cycles require more cash to handle rapid transactions.

D : Companies must keep more cash on hand if they maintain a longer cash cycle.

Answer: D

Question 3

In the capital asset pricing model (CAPM), what does a beta (#) greater than 1 signify for a portfolio?

A : The portfolio will always outperform the market.

B : The portfolio has more risk than the market.

C : The portfolio has less risk than the market.

D : The portfolio is expected to move in the opposite direction of the market.

Answer: B

Question 4

What is the significance of Section 302 of the Sarbanes–Oxley Act (SOX)?

A : It requires management to certify the accuracy of financial reports.

B : It requires the external auditor to take responsibility for financial accuracy.

C : It relaxes the requirements for internal control.

D : It allows companies to opt out of internal control reporting.

Answer: A

Question 5

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 : $15

B : $20

C : $40

D : $61

Answer: C

Page: 1 / 17

Total 84 Questions | Updated On: Sep 23, 2026

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