Question 1

The maximum number of shares a firm can issue is known as:

Accepted Answer

A)  issued but not outstanding 
B)  issued and outstanding 
C)  authorized shares 
D)  none of the above 
A)  issued but not outstanding 
B)  issued and outstanding 
C)  authorized shares 
D)  none of the above

Question 2

Debt that may be extinguished before maturity is referred to as:

Accepted Answer

A)  Sinking-fund 
B)  Debentures 
C)  Unfunded debt 
D)  Callable debt 
A)  Sinking-fund 
B)  Debentures 
C)  Unfunded debt 
D)  Callable debt

Question 3

Which of the following instruments gives the owner the right to purchase securities directly from the firm at a fixed price during a specified period of time?

Accepted Answer

A)  Warrant 
B)  Call option 
C)  American option 
D)  European option 
A)  Warrant 
B)  Call option 
C)  American option 
D)  European option

Question 4

A modification to the company charter that requires 75% shareholder approval for a merger is called a(n):

Accepted Answer

A)  Majority voting amendment 
B)  Cumulative voting amendment 
C)  Proxy voting amendment 
D)  Supermajority amendment 
A)  Majority voting amendment 
B)  Cumulative voting amendment 
C)  Proxy voting amendment 
D)  Supermajority amendment

Question 5

A floating-rate loan is the opposite of a sinking fund.

Accepted Answer

A) True 
 B)False

Question 6

The following are debt in disguise except:

Accepted Answer

A)  accounts payable 
B)  lease 
C)  unfounded obligations 
D)  all of the above are debt in disguise 
A)  accounts payable 
B)  lease 
C)  unfounded obligations 
D)  all of the above are debt in disguise

Question 7

Explain how shareholders might have lost control over the firm, relative to managers, over the years.

Accepted Answer

There are many possible answers to this

Question 8

Total capitalization is defined as:

Accepted Answer

A)  Total long-term liabilities plus stockholders' equity 
B)  Total debt plus stockholders' equity 
C)  Total debt minus stockholders' equity 
D)  Current liabilities and stockholders' equity 
A)  Total long-term liabilities plus stockholders' equity 
B)  Total debt plus stockholders' equity 
C)  Total debt minus stockholders' equity 
D)  Current liabilities and stockholders' equity

Question 9

Briefly explain different types of financial markets.

Accepted Answer

Financial markets can be classified as "

Question 10

Shareholders have more influence over who sits on the board of directors than the firm
CEO.

Accepted Answer

A) True 
 B)False

Question 11

When an entire security issue is directly sold to qualified institutional investors, such an issue is called a:

Accepted Answer

A)  Public issue 
B)  Private placement 
C)  Securitization 
D)  Commercial paper 
A)  Public issue 
B)  Private placement 
C)  Securitization 
D)  Commercial paper

Question 12

What percentage of corporate financing (non-financial) is made up of internal funds for firms in the U.S.A.?

Accepted Answer

A)  75% (approximately) 
B)  50% (approximately) 
C)  25% (approximately) 
D)  none of the above 
A)  75% (approximately) 
B)  50% (approximately) 
C)  25% (approximately) 
D)  none of the above

Question 13

LIBOR stands for London Interbank Offered Rate.

Accepted Answer

A) True 
 B)False

Question 14

In the case of Google, which has issued Class A and Class B shares:
I. both classes of shares have the same cash flow rights
II. both classes of shares have the same control rights
III. both classes of shares have different cash flow rights
IV. both classes of shares have different control rights

Accepted Answer

A)  I and II only 
B)  II and III only 
C)  I and IV only 
D)  none of the above 
A)  I and II only 
B)  II and III only 
C)  I and IV only 
D)  none of the above

Question 15

The single European currency established by European union is called "Euro."

Accepted Answer

A) True 
 B)False

Question 16

Stockholders usually have the following rights:

Accepted Answer

A)  To elect board members, authorize issue of new shares and vote on matters of great importance like mergers 
B)  To share proportionally in regular and liquidating dividends 
C)  To share proportionally in any new stock sold 
D)  All of the above 
A)  To elect board members, authorize issue of new shares and vote on matters of great importance like mergers 
B)  To share proportionally in regular and liquidating dividends 
C)  To share proportionally in any new stock sold 
D)  All of the above

Question 17

Shares of stock that have been repurchased by the corporation are called

Accepted Answer

A)  Authorized shares 
B)  Repurchase agreements 
C)  Treasury stock 
D)  Retained equity 
A)  Authorized shares 
B)  Repurchase agreements 
C)  Treasury stock 
D)  Retained equity

Question 18

US dollars deposited in a German bank are called:

Accepted Answer

A)  Deutsche dollars 
B)  American depositing receipts 
C)  Eurodollars 
D)  None of the above 
A)  Deutsche dollars 
B)  American depositing receipts 
C)  Eurodollars 
D)  None of the above

Question 19

Capital surplus usually refers to:

Accepted Answer

A)  The stock's par value 
B)  The accumulated retained earnings during the life of the corporation 
C)  The amount of stock repurchased 
D)  The amount of directly contributed equity capital in excess of par value 
A)  The stock's par value 
B)  The accumulated retained earnings during the life of the corporation 
C)  The amount of stock repurchased 
D)  The amount of directly contributed equity capital in excess of par value

Question 20

In the United States the premium that an investor needed to pay to gain voting control is:

Accepted Answer

A)  29% 
B)  36% 
C)  2% 
D)  none of the above 
A)  29% 
B)  36% 
C)  2% 
D)  none of the above

Exam 14: An Overview of Corporate Financing

The maximum number of shares a firm can issue is known as:

Debt that may be extinguished before maturity is referred to as:

Which of the following instruments gives the owner the right to purchase securities directly from the firm at a fixed price during a specified period of time?

A modification to the company charter that requires 75% shareholder approval for a merger is called a(n):

A floating-rate loan is the opposite of a sinking fund.

The following are debt in disguise except:

Explain how shareholders might have lost control over the firm, relative to managers, over the years.

Total capitalization is defined as:

Briefly explain different types of financial markets.

Shareholders have more influence over who sits on the board of directors than the firm CEO.

When an entire security issue is directly sold to qualified institutional investors, such an issue is called a:

What percentage of corporate financing (non-financial) is made up of internal funds for firms in the U.S.A.?

LIBOR stands for London Interbank Offered Rate.

In the case of Google, which has issued Class A and Class B shares: I. both classes of shares have the same cash flow rights II. both classes of shares have the same control rights III. both classes of shares have different cash flow rights IV. both classes of shares have different control rights

The single European currency established by European union is called "Euro."

Stockholders usually have the following rights:

Shares of stock that have been repurchased by the corporation are called

US dollars deposited in a German bank are called:

Capital surplus usually refers to:

In the United States the premium that an investor needed to pay to gain voting control is:

Goals and Governance of the Firm

How to Calculate Present Values

Valuing Bonds

The Value of Common Stocks

Net Present Value and Other Investment Criteria

Making Investment Decisions With the Net Present Value Rule

Introduction to Risk and Return

Portfolio Theory and the Capital Asset Pricing Model

Risk and the Cost of Capital

Project Analysis

Investment, Strategy, and Economic Rents

Agency Problems, Compensation, and Performance Measurement

Efficient Markets and Behavioral Finance

How Corporations Issue Securities

Payout Policy

Does Debt Policy Matter

How Much Should a Corporation Borrow

Financing and Valuation

Understanding Options

Valuing Options

Real Options

Credit Risk and the Value of Corporate Debt

The Many Different Kinds of Debt

Leasing

Managing Risk

Managing International Risks

Financial Analysis

Financial Planning

Working Capital Management

Mergers

Corporate Restructuring

Governance and Corporate Control Around the World

Filters