Question 1

Revenue obtained through selling assets is an example of an external source of income.

Accepted Answer

A) True 
 B)False  False

Question 2

Cost of capital is the average rate of interest a firm pays on its combination of debt and equity.

Accepted Answer

A) True 
 B)False  True

Question 3

________ can be exchanged at the investor's option for a certain number of shares of the corporation's common stock.

Accepted Answer

A)  Collateralized bonds 
B)  Protected bonds 
C)  Bills of exchange 
D)  Debentures 
E)  Convertible bonds 
A)  Collateralized bonds 
B)  Protected bonds 
C)  Bills of exchange 
D)  Debentures 
E)  Convertible bonds E

Question 4

________ is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Accepted Answer

A)  Returns projection 
B)  Budgeting 
C)  Leverage 
D)  Forecasting 
E)  Financial projection 
A)  Returns projection 
B)  Budgeting 
C)  Leverage 
D)  Forecasting 
E)  Financial projection

Question 5

Compare and contrast various types of budgets.

Accepted Answer

Start-up budget is a budget that identif

Question 6

Which of the following is a major difference between debt financing and equity financing?

Accepted Answer

A)  Equity financing has a specific maturity period, whereas debt financing usually has no specific maturity period. 
B)  Debt financing is not linked to organizational performance, unlike equity financing. 
C)  Equity holders have primary claims on assets unlike debt financiers. 
D)  Payments to equity holders reduce taxable income, whereas debt payments are not tax deductible. 
E)  Debt financing is used to cover long term expenses, whereas equity financing is used for current expenses. 
A)  Equity financing has a specific maturity period, whereas debt financing usually has no specific maturity period. 
B)  Debt financing is not linked to organizational performance, unlike equity financing. 
C)  Equity holders have primary claims on assets unlike debt financiers. 
D)  Payments to equity holders reduce taxable income, whereas debt payments are not tax deductible. 
E)  Debt financing is used to cover long term expenses, whereas equity financing is used for current expenses.

Question 7

An operational budget outlines expenditures for real estate,new facilities,and major equipments.

Accepted Answer

A) True 
 B)False

Question 8

Equity financing refers to arranging funding by selling ownership shares in the company.

Accepted Answer

A) True 
 B)False

Question 9

Explain the concept of risk/return trade-off.

Accepted Answer

Most financial decisions involve balanci

Question 10

Incobar Steel is a large manufacturer of steel.The company decides to issue bonds to raise money to expand its operations.The final maturity term of the bonds is three years,but a portion of the outstanding bonds matures once in every six months.The bonds are backed only by the corporation's promise to pay.The bonds that Incobar Steel is issuing are best referred to as ________ bonds.

Accepted Answer

A)  mortgage 
B)  callable 
C)  term 
D)  secured 
E)  serial 
A)  mortgage 
B)  callable 
C)  term 
D)  secured 
E)  serial

Question 11

Factoring refers to lending a lump sum of cash via a promissory note or on-demand access without accepting any other securities.

Accepted Answer

A) True 
 B)False

Question 12

Hedging refers to forming contracts that allow a company to ________.

Accepted Answer

A)  obtain funds for a short period without paying interest 
B)  buy supplies in the future at designated prices 
C)  finance long-term debt on a continuous basis 
D)  engage in buyer-seller relationships with many firms 
E)  issue letters of credit to buyers exterior to the home country 
A)  obtain funds for a short period without paying interest 
B)  buy supplies in the future at designated prices 
C)  finance long-term debt on a continuous basis 
D)  engage in buyer-seller relationships with many firms 
E)  issue letters of credit to buyers exterior to the home country

Question 13

Secured loans are backed up with assets that the lender can claim in case of default.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is an internal source for obtaining funds for business?

Accepted Answer

A)  issuing corporate bonds 
B)  unsecured loans 
C)  factoring 
D)  commercial papers 
E)  selling assets to obtain revenue 
A)  issuing corporate bonds 
B)  unsecured loans 
C)  factoring 
D)  commercial papers 
E)  selling assets to obtain revenue

Question 15

________ refers to short-term promissory notes,or contractual agreements,to repay a borrowed amount by a specified time with a specified interest rate.

Accepted Answer

A)  Corporate bond 
B)  Factoring 
C)  Trade credit 
D)  Lease agreement 
E)  Commercial paper 
A)  Corporate bond 
B)  Factoring 
C)  Trade credit 
D)  Lease agreement 
E)  Commercial paper

Question 16

Lease is an agreement to use an asset in exchange for regular payment.

Accepted Answer

A) True 
 B)False

Question 17

Venture capital is an example of private equity.

Accepted Answer

A) True 
 B)False

Question 18

________ is an arrangement in which a financial institution makes money available for use at any time after the loan has been approved.

Accepted Answer

A)  Leasing agreement 
B)  Credit card 
C)  Secured loan 
D)  Line of credit 
E)  Commercial paper 
A)  Leasing agreement 
B)  Credit card 
C)  Secured loan 
D)  Line of credit 
E)  Commercial paper

Question 19

A financial plan outlines the funds needed for a certain period of time.

Accepted Answer

A) True 
 B)False

Question 20

________ is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Accepted Answer

A)  Financial adviser 
B)  Underwriter 
C)  Controller 
D)  Treasurer 
E)  Financial renovator 
A)  Financial adviser 
B)  Underwriter 
C)  Controller 
D)  Treasurer 
E)  Financial renovator

Revenue obtained through selling assets is an example of an external source of income.

Cost of capital is the average rate of interest a firm pays on its combination of debt and equity.

________ can be exchanged at the investor's option for a certain number of shares of the corporation's common stock.

________ is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Compare and contrast various types of budgets.

Which of the following is a major difference between debt financing and equity financing?

An operational budget outlines expenditures for real estate,new facilities,and major equipments.

Equity financing refers to arranging funding by selling ownership shares in the company.

Explain the concept of risk/return trade-off.

Factoring refers to lending a lump sum of cash via a promissory note or on-demand access without accepting any other securities.

Hedging refers to forming contracts that allow a company to ________.

Secured loans are backed up with assets that the lender can claim in case of default.

Which of the following is an internal source for obtaining funds for business?

________ refers to short-term promissory notes,or contractual agreements,to repay a borrowed amount by a specified time with a specified interest rate.

Lease is an agreement to use an asset in exchange for regular payment.

Venture capital is an example of private equity.

________ is an arrangement in which a financial institution makes money available for use at any time after the loan has been approved.

A financial plan outlines the funds needed for a certain period of time.

________ is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters

Exam 18: Financial Management

Revenue obtained through selling assets is an example of an external source of income.

Cost of capital is the average rate of interest a firm pays on its combination of debt and equity.

________ can be exchanged at the investor's option for a certain number of shares of the corporation's common stock.

________ is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Compare and contrast various types of budgets.

Which of the following is a major difference between debt financing and equity financing?

An operational budget outlines expenditures for real estate,new facilities,and major equipments.

Equity financing refers to arranging funding by selling ownership shares in the company.

Explain the concept of risk/return trade-off.

Factoring refers to lending a lump sum of cash via a promissory note or on-demand access without accepting any other securities.

Hedging refers to forming contracts that allow a company to ________.

Secured loans are backed up with assets that the lender can claim in case of default.

Which of the following is an internal source for obtaining funds for business?

________ refers to short-term promissory notes,or contractual agreements,to repay a borrowed amount by a specified time with a specified interest rate.

Lease is an agreement to use an asset in exchange for regular payment.

Venture capital is an example of private equity.

________ is an arrangement in which a financial institution makes money available for use at any time after the loan has been approved.

A financial plan outlines the funds needed for a certain period of time.

________ is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters