Question 1

What is the difference between a line of credit and a revolving credit agreement?

Accepted Answer

A) A line of credit is normally used by charitable and public-sector organizations,while a revolving credit agreement is usually used by private-sector business firms. 
B) More money can be borrowed with a line of credit than with a revolving credit agreement. 
C) There is no guarantee that the money will be available when it is requested in a line of credit,but there is an agreement that it will be available when requested in a revolving credit agreement. 
D) A line of credit is only obtainable from a credit union,while a revolving credit agreement is only obtainable from a bank. 
E) All of these are correct. 
A) A line of credit is normally used by charitable and public-sector organizations,while a revolving credit agreement is usually used by private-sector business firms. 
B) More money can be borrowed with a line of credit than with a revolving credit agreement. 
C) There is no guarantee that the money will be available when it is requested in a line of credit,but there is an agreement that it will be available when requested in a revolving credit agreement. 
D) A line of credit is only obtainable from a credit union,while a revolving credit agreement is only obtainable from a bank. 
E) All of these are correct. C

Question 2

An unsecured loan is a short-term loan in which the borrower is not required to put up collateral.

Accepted Answer

A) True 
 B)False  True

Question 3

Klaus just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

Accepted Answer

A) Stop order,round lot 
B) Round lot,limit order 
C) Market order,round lot 
D) Limit order,odd lot 
E) Odd lot,stop order 
A) Stop order,round lot 
B) Round lot,limit order 
C) Market order,round lot 
D) Limit order,odd lot 
E) Odd lot,stop order E

Question 4

When an investment bank engages in underwriting,that investment bank is taking on risk in the process of launching new securities.

Accepted Answer

A) True 
 B)False

Question 5

Sallyanne is selling merchandise to Jack's Machine Shop.Sallyanne felt secure in receiving payment because she had Jack sign a promissory note.Sallyanne felt secure because a promissory note is

Accepted Answer

A) an agreement signed by the buyer stating when and how much money will be paid to the seller in return for immediate credit. 
B) the requirement for a firm to maintain a certain amount of funds on deposit with the lending bank. 
C) a "gentleman's agreement" to pay for products which were shipped on faith that the payment would be forthcoming. 
D) the right given to a bank to seize certain assets if payment is not made when due. 
E) basically the same thing as a trade acceptance. 
A) an agreement signed by the buyer stating when and how much money will be paid to the seller in return for immediate credit. 
B) the requirement for a firm to maintain a certain amount of funds on deposit with the lending bank. 
C) a "gentleman's agreement" to pay for products which were shipped on faith that the payment would be forthcoming. 
D) the right given to a bank to seize certain assets if payment is not made when due. 
E) basically the same thing as a trade acceptance.

Question 6

A bundle of stocks (or bonds)that is in an index that tracks the overall movement of the market is known as an exchange-traded fund (ETF).

Accepted Answer

A) True 
 B)False

Question 7

Milan is looking at a bill for supplies his company bought.It is dated May 1st and the terms are 2/10;net 30.In order to pay the least amount,when should he pay the bill?

Accepted Answer

A) Any day in May 
B) May 10 
C) May 21 
D) May 31 
E) May 15 
A) Any day in May 
B) May 10 
C) May 21 
D) May 31 
E) May 15

Question 8

Parker Corp.has decided to pay employee medical costs out of company funds rather than buying insurance.This is an example of

Accepted Answer

A) risk control. 
B) risk avoidance. 
C) risk transfer. 
D) risk shift. 
E) risk retention. 
A) risk control. 
B) risk avoidance. 
C) risk transfer. 
D) risk shift. 
E) risk retention.

Question 9

Naveen has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously granted.Which of the following will be impacted by this change?

Accepted Answer

A) Inventories 
B) Raw materials inventory 
C) Accounts receivable 
D) Capital expenditures 
E) Cash flow 
A) Inventories 
B) Raw materials inventory 
C) Accounts receivable 
D) Capital expenditures 
E) Cash flow

Question 10

A stop order prevents the broker from selling a client's stock.

Accepted Answer

A) True 
 B)False

Question 11

Describe the services provided by investment banks.

Accepted Answer

Investment banks provide three important

Question 12

Which of the following is correct with regard to market capitalization?

Accepted Answer

A) There is considerable stability in the market capitalization of companies from year to year. 
B) Market capitalization is computed by dividing owners' equity by the number of outstanding shares. 
C) In Canada,most of the companies with the highest market capitalization are financial institutions or resource companies. 
D) There is general agreement that market capitalization really doesn't tell us very much about the real value of a company. 
E) All of these are correct. 
A) There is considerable stability in the market capitalization of companies from year to year. 
B) Market capitalization is computed by dividing owners' equity by the number of outstanding shares. 
C) In Canada,most of the companies with the highest market capitalization are financial institutions or resource companies. 
D) There is general agreement that market capitalization really doesn't tell us very much about the real value of a company. 
E) All of these are correct.

Question 13

What is financial control?

Accepted Answer

Financial control is the process of chec

Question 14

Preferred shares never mature,however,payments to the holder are fixed in amount and can be withheld if the company wishes.

Accepted Answer

A) True 
 B)False

Question 15

A factor buys $50 000 worth of receivables.How much will the factor eventually sell the receivables for?

Accepted Answer

A) $40 000 
B) $45 000 
C) $80 000 
D) $85 000 
E) It is impossible to know,given the information that is provided. 
A) $40 000 
B) $45 000 
C) $80 000 
D) $85 000 
E) It is impossible to know,given the information that is provided.

Question 16

Convertible bonds can be converted to common stock,but only with approval of the issuing company.

Accepted Answer

A) True 
 B)False

Question 17

A credit policy of "2/10,net 30" means

Accepted Answer

A) that if a customer pays its bill within 10 days,it will receive a 30 percent discount. 
B) that if a customer pays its bill within 30 days,it will receive a 10 percent discount. 
C) that if a customer pays its bill within 2 days,it will receive a 10 percent discount. 
D) that if a customer pays its bill within 10 days,it will receive a 2 percent discount. 
E) None of these are correct. 
A) that if a customer pays its bill within 10 days,it will receive a 30 percent discount. 
B) that if a customer pays its bill within 30 days,it will receive a 10 percent discount. 
C) that if a customer pays its bill within 2 days,it will receive a 10 percent discount. 
D) that if a customer pays its bill within 10 days,it will receive a 2 percent discount. 
E) None of these are correct.

Question 18

The business activity that is concerned with determining a firm's long-term investments,obtaining the funds to pay for those investments,and conducting the firm's everyday financial activities is

Accepted Answer

A) bookkeeping. 
B) corporate finance. 
C) investment brokers. 
D) chartered banks. 
E) money markets. 
A) bookkeeping. 
B) corporate finance. 
C) investment brokers. 
D) chartered banks. 
E) money markets.

Question 19

Budgets are key in financial control.

Accepted Answer

A) True 
 B)False

Question 20

Which term is used to identify the granting of credit by one firm to another?

Accepted Answer

A) A line of credit 
B) A commitment fee 
C) Trade credit 
D) A secured loan 
E) An interfirm understanding of commercial intent 
A) A line of credit 
B) A commitment fee 
C) Trade credit 
D) A secured loan 
E) An interfirm understanding of commercial intent

What is the difference between a line of credit and a revolving credit agreement?

An unsecured loan is a short-term loan in which the borrower is not required to put up collateral.

Klaus just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

When an investment bank engages in underwriting,that investment bank is taking on risk in the process of launching new securities.

Sallyanne is selling merchandise to Jack's Machine Shop.Sallyanne felt secure in receiving payment because she had Jack sign a promissory note.Sallyanne felt secure because a promissory note is

A bundle of stocks (or bonds)that is in an index that tracks the overall movement of the market is known as an exchange-traded fund (ETF).

Milan is looking at a bill for supplies his company bought.It is dated May 1st and the terms are 2/10;net 30.In order to pay the least amount,when should he pay the bill?

Parker Corp.has decided to pay employee medical costs out of company funds rather than buying insurance.This is an example of

Naveen has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously granted.Which of the following will be impacted by this change?

A stop order prevents the broker from selling a client's stock.

Describe the services provided by investment banks.

Which of the following is correct with regard to market capitalization?

What is financial control?

Preferred shares never mature,however,payments to the holder are fixed in amount and can be withheld if the company wishes.

A factor buys $50 000 worth of receivables.How much will the factor eventually sell the receivables for?

Convertible bonds can be converted to common stock,but only with approval of the issuing company.

A credit policy of "2/10,net 30" means

The business activity that is concerned with determining a firm's long-term investments,obtaining the funds to pay for those investments,and conducting the firm's everyday financial activities is

Budgets are key in financial control.

Which term is used to identify the granting of credit by one firm to another?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

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Exam 15: Financial Decisions and Risk Management

What is the difference between a line of credit and a revolving credit agreement?

An unsecured loan is a short-term loan in which the borrower is not required to put up collateral.

Klaus just called his broker to place an order to sell his 50 shares of IBM if the price falls to 100.Which of the terms below describe his order?

When an investment bank engages in underwriting,that investment bank is taking on risk in the process of launching new securities.

Sallyanne is selling merchandise to Jack's Machine Shop.Sallyanne felt secure in receiving payment because she had Jack sign a promissory note.Sallyanne felt secure because a promissory note is

A bundle of stocks (or bonds)that is in an index that tracks the overall movement of the market is known as an exchange-traded fund (ETF).

Milan is looking at a bill for supplies his company bought.It is dated May 1st and the terms are 2/10;net 30.In order to pay the least amount,when should he pay the bill?

Parker Corp.has decided to pay employee medical costs out of company funds rather than buying insurance.This is an example of

Naveen has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously granted.Which of the following will be impacted by this change?

A stop order prevents the broker from selling a client's stock.

Describe the services provided by investment banks.

Which of the following is correct with regard to market capitalization?

What is financial control?

Preferred shares never mature,however,payments to the holder are fixed in amount and can be withheld if the company wishes.

A factor buys $50 000 worth of receivables.How much will the factor eventually sell the receivables for?

Convertible bonds can be converted to common stock,but only with approval of the issuing company.

A credit policy of "2/10,net 30" means

The business activity that is concerned with determining a firm's long-term investments,obtaining the funds to pay for those investments,and conducting the firm's everyday financial activities is

Budgets are key in financial control.

Which term is used to identify the granting of credit by one firm to another?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship,small Business,and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating,satisfying,and Leading Employees

Operations Management,productivity,and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing,promoting,and Distributing Products

Money and Banking

Filters