Question 1

The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to

Accepted Answer

A)  ensure that a cash shortage does not cause an inability to meet current obligations. 
B)  assure the lender that the borrowed funds are put to the use for which they were intended. 
C)  prevent liquidation of assets through large salary increases of key employees. 
D)  limit the amount of fixed-payment obligations. 
A)  ensure that a cash shortage does not cause an inability to meet current obligations. 
B)  assure the lender that the borrowed funds are put to the use for which they were intended. 
C)  prevent liquidation of assets through large salary increases of key employees. 
D)  limit the amount of fixed-payment obligations.

Question 2

An instrument that give their holders the right to purchase a certain number of shares of the firm'scommon stock at a specified price over a certain period of time is called

Accepted Answer

A)  a call feature. 
B)  a conversion feature. 
C)  a stock purchase warrant. 
D)  none of the above. 
A)  a call feature. 
B)  a conversion feature. 
C)  a stock purchase warrant. 
D)  none of the above.

Question 3

The principal nongovernment marketable securities are all of the following EXCEPT

Accepted Answer

A)  negotiable certificates of deposit. 
B)  money market mutual funds. 
C)  Eurodollar deposits. 
D)  agency issues. 
A)  negotiable certificates of deposit. 
B)  money market mutual funds. 
C)  Eurodollar deposits. 
D)  agency issues.

Question 4

Another name for a bond that does not make periodic coupon payments is a

Accepted Answer

A)  subordinated debenture. 
B)  zero coupon bond. 
C)  junk bond. 
D)  floating rate bond. 
A)  subordinated debenture. 
B)  zero coupon bond. 
C)  junk bond. 
D)  floating rate bond.

Question 5

Which of the following is NOT a financial institution?

Accepted Answer

A)  a newspaper publisher 
B)  an insurance company 
C)  a commercial bank 
D)  a pension fund 
A)  a newspaper publisher 
B)  an insurance company 
C)  a commercial bank 
D)  a pension fund

Question 6

The over-the-counter market is

Accepted Answer

A)  a place where securities are bought and sold. 
B)  the New York Stock Exchange. 
C)  an intangible market for unlisted securities. 
D)  an organized stock exchange. 
A)  a place where securities are bought and sold. 
B)  the New York Stock Exchange. 
C)  an intangible market for unlisted securities. 
D)  an organized stock exchange.

Question 7

By definition, the money market involves the buying and selling of

Accepted Answer

A)  stocks and bonds. 
B)  funds that mature in more than one year. 
C)  short-term funds. 
D)  flows of funds. 
A)  stocks and bonds. 
B)  funds that mature in more than one year. 
C)  short-term funds. 
D)  flows of funds.

Question 8

___________arise from a short-term credit arrangement used by businesses to finance transactionsinvolving firms in foreign countries or firms with unknown credit capacities.

Accepted Answer

A)  Money market mutual funds 
B)  Eurodollar deposits 
C)  Negotiable certificates of deposit 
D)  Banker's acceptances 
A)  Money market mutual funds 
B)  Eurodollar deposits 
C)  Negotiable certificates of deposit 
D)  Banker's acceptances

Question 9

A violation of preferred stock restrictive covenants usually permits preferred shareholders to

Accepted Answer

A)  force the retirement of the preferred stock at or above its par value. 
B)  force the company to repurchase the shares at a stated amount below par. 
C)  force the company into bankruptcy. 
D)  sell their shares. 
A)  force the retirement of the preferred stock at or above its par value. 
B)  force the company to repurchase the shares at a stated amount below par. 
C)  force the company into bankruptcy. 
D)  sell their shares.

Question 10

Trading is carried out in the Over-the-Counter (OTC) Exchange by

Accepted Answer

A)  the auction process. 
B)  the competitive bid process and the negotiation process. 
C)  an investment banker. 
D)  the competitive bid process. 
A)  the auction process. 
B)  the competitive bid process and the negotiation process. 
C)  an investment banker. 
D)  the competitive bid process.

Question 11

___________are claims that are not satisfied until those of the creditors holding certain (senior) debts have been fully satisfied.

Accepted Answer

A)  Convertible debentures 
B)  Collateral trust bonds 
C)  Mortgage bonds 
D)  Subordinated debentures 
A)  Convertible debentures 
B)  Collateral trust bonds 
C)  Mortgage bonds 
D)  Subordinated debentures

Question 12

A___________ is a complex and lengthy legal document stating the conditions under which a bond has been issued.

Accepted Answer

A)  warrant 
B)  bond indenture 
C)  bond debenture 
D)  sinking fund 
A)  warrant 
B)  bond indenture 
C)  bond debenture 
D)  sinking fund

Question 13

The nongovernment issues typically have slightly higher yields than government issues withsimilar maturities due to the slightly _ ___________associated with them.

Accepted Answer

A)  higher profitability 
B)  lower risk 
C)  higher risk 
D)  stronger secondary market 
A)  higher profitability 
B)  lower risk 
C)  higher risk 
D)  stronger secondary market

Question 14

Which of the following is true of a Eurodollar deposit?

Accepted Answer

A)  Eurodollar deposits tend to provide higher yields above nearly all other marketable securities with similar maturities due to the absence of an active secondary market. 
B)  Eurodollar deposits tend to provide yields above nearly all other marketable securities with similar maturities due to the higher risk. 
C)  Eurodollar deposits tend to provide yields below nearly all other marketable securities with similar maturities due to their low risk. 
D)  Eurodollar deposits are nonnegotiable and pay interest only at maturity, hence the yield is higher than on other marketable securities with similar maturities. 
A)  Eurodollar deposits tend to provide higher yields above nearly all other marketable securities with similar maturities due to the absence of an active secondary market. 
B)  Eurodollar deposits tend to provide yields above nearly all other marketable securities with similar maturities due to the higher risk. 
C)  Eurodollar deposits tend to provide yields below nearly all other marketable securities with similar maturities due to their low risk. 
D)  Eurodollar deposits are nonnegotiable and pay interest only at maturity, hence the yield is higher than on other marketable securities with similar maturities.

Question 15

A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a

Accepted Answer

A)  bond indenture. 
B)  corporate bond. 
C)  treasury bond. 
D)  discount bond. 
A)  bond indenture. 
B)  corporate bond. 
C)  treasury bond. 
D)  discount bond.

Question 16

___________allow the holder to purchase a certain number of shares of the firm's common stock at a specified price over a certain period of time and are occasionally part of a debt agreement.

Accepted Answer

A)  Stock-purchase warrants 
B)  Debentures 
C)  Puts and calls 
D)  Rights 
A)  Stock-purchase warrants 
B)  Debentures 
C)  Puts and calls 
D)  Rights

Question 17

Firms that require funds from external sources can obtain them from

Accepted Answer

A)  financial institutions. 
B)  private placement. 
C)  financial markets. 
D)  all of the above. 
A)  financial institutions. 
B)  private placement. 
C)  financial markets. 
D)  all of the above.

Question 18

The risk of an investment in a Eurodollar deposit is partially due to

Accepted Answer

A)  the fact that the majority of these deposits are not in the form of Canadian dollars. 
B)  the fact that these instruments only pay interest at maturity. 
C)  the presence of some foreign exchange risk. 
D)  the fact that the center of the Eurodollar market is in London. 
A)  the fact that the majority of these deposits are not in the form of Canadian dollars. 
B)  the fact that these instruments only pay interest at maturity. 
C)  the presence of some foreign exchange risk. 
D)  the fact that the center of the Eurodollar market is in London.

Question 19

All of the following features may be characteristic of preferred stock EXCEPT

Accepted Answer

A)  callable. 
B)  no maturity date. 
C)  convertible. 
D)  tax-deductible dividends. 
A)  callable. 
B)  no maturity date. 
C)  convertible. 
D)  tax-deductible dividends.

Question 20

Trading is carried out on the floor of the Toronto Stock Exchange by

Accepted Answer

A)  a telecommunications network. 
B)  investment bankers. 
C)  the auction process. 
D)  the negotiation process. 
A)  a telecommunications network. 
B)  investment bankers. 
C)  the auction process. 
D)  the negotiation process.

The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to

An instrument that give their holders the right to purchase a certain number of shares of the firm'scommon stock at a specified price over a certain period of time is called

The principal nongovernment marketable securities are all of the following EXCEPT

Another name for a bond that does not make periodic coupon payments is a

Which of the following is NOT a financial institution?

The over-the-counter market is

By definition, the money market involves the buying and selling of

___________arise from a short-term credit arrangement used by businesses to finance transactionsinvolving firms in foreign countries or firms with unknown credit capacities.

A violation of preferred stock restrictive covenants usually permits preferred shareholders to

Trading is carried out in the Over-the-Counter (OTC) Exchange by

___________are claims that are not satisfied until those of the creditors holding certain (senior) debts have been fully satisfied.

A___________ is a complex and lengthy legal document stating the conditions under which a bond has been issued.

The nongovernment issues typically have slightly higher yields than government issues withsimilar maturities due to the slightly _ ___________associated with them.

Which of the following is true of a Eurodollar deposit?

A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a

___________allow the holder to purchase a certain number of shares of the firm's common stock at a specified price over a certain period of time and are occasionally part of a debt agreement.

Firms that require funds from external sources can obtain them from

The risk of an investment in a Eurodollar deposit is partially due to

All of the following features may be characteristic of preferred stock EXCEPT

Trading is carried out on the floor of the Toronto Stock Exchange by

Overview of Corporate Finance

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

Financial Planning and Forecasting

Time Value of Money

Risk and Return

Valuation of Financial Securities

The Cost of Capital

Leverage and Capital Structure

Dividend Policy

Capital Budgeting: Principles and Techniques

Dealing With Project Risk and Other Topics in Capital Budgeting

Working Capital and Management of Current Assets

Management of Current Liabilities

Lease Financing: Concepts and Techniques

Corporate Securities, Derivatives, and Swaps

Mergers and Acquisitions, and Business Failure

International Corporate Finance

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Exam 5: Financial Markets, Institutions, and Securities

The purpose of the restrictive debt covenant that prohibits the sale of accounts receivable is to

An instrument that give their holders the right to purchase a certain number of shares of the firm'scommon stock at a specified price over a certain period of time is called

The principal nongovernment marketable securities are all of the following EXCEPT

Another name for a bond that does not make periodic coupon payments is a

Which of the following is NOT a financial institution?

The over-the-counter market is

By definition, the money market involves the buying and selling of

___________arise from a short-term credit arrangement used by businesses to finance transactionsinvolving firms in foreign countries or firms with unknown credit capacities.

A violation of preferred stock restrictive covenants usually permits preferred shareholders to

Trading is carried out in the Over-the-Counter (OTC) Exchange by

___________are claims that are not satisfied until those of the creditors holding certain (senior) debts have been fully satisfied.

A___________ is a complex and lengthy legal document stating the conditions under which a bond has been issued.

The nongovernment issues typically have slightly higher yields than government issues withsimilar maturities due to the slightly _ ___________associated with them.

Which of the following is true of a Eurodollar deposit?

A debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms is called a

___________allow the holder to purchase a certain number of shares of the firm's common stock at a specified price over a certain period of time and are occasionally part of a debt agreement.

Firms that require funds from external sources can obtain them from

The risk of an investment in a Eurodollar deposit is partially due to

All of the following features may be characteristic of preferred stock EXCEPT

Trading is carried out on the floor of the Toronto Stock Exchange by

Overview of Corporate Finance

Financial Statements, Cash Flows, and Taxes

Financial Statement Analysis

Financial Planning and Forecasting

Time Value of Money

Risk and Return

Valuation of Financial Securities

The Cost of Capital

Leverage and Capital Structure

Dividend Policy

Capital Budgeting: Principles and Techniques

Dealing With Project Risk and Other Topics in Capital Budgeting

Working Capital and Management of Current Assets

Management of Current Liabilities

Lease Financing: Concepts and Techniques

Corporate Securities, Derivatives, and Swaps

Mergers and Acquisitions, and Business Failure

International Corporate Finance

Filters