Question 1

A tool that managers use to estimate major expenditures for assets, expansion of facilities, and mergers and acquisitions is called a(n)

Accepted Answer

A)  capital budget. 
B)  cash budget. 
C)  revenue forecast. 
D)  zero budget. 
E)  equity budget. 
A)  capital budget. 
B)  cash budget. 
C)  revenue forecast. 
D)  zero budget. 
E)  equity budget. A

Question 2

Suppose IBM decided to issue commercial paper in denominations of €5,000 to raise a large sum of money.Since the commercial paper is secured only by IBM's reputation,

Accepted Answer

A)  IBM does not have to pay back the principal. 
B)  IBM has to pay interest rates higher than those charged by commercial banks for short-term loans. 
C)  no interest is paid. 
D)  no collateral is involved. 
E)  the commercial paper can be issued only in €1,500 or €10,000 denominations. 
A)  IBM does not have to pay back the principal. 
B)  IBM has to pay interest rates higher than those charged by commercial banks for short-term loans. 
C)  no interest is paid. 
D)  no collateral is involved. 
E)  the commercial paper can be issued only in €1,500 or €10,000 denominations. D

Question 3

Commercial paper usually is issued

Accepted Answer

A)  for 3 to 7 years. 
B)  for short-term financing by large corporations. 
C)  for short-term financing by small businesses. 
D)  by large corporations unable to get credit elsewhere. 
E)  by savings and loan associations. 
A)  for 3 to 7 years. 
B)  for short-term financing by large corporations. 
C)  for short-term financing by small businesses. 
D)  by large corporations unable to get credit elsewhere. 
E)  by savings and loan associations. B

Question 4

Morgan's Transition
Morgan is currently a manager of a small financial planning firm.He is seeking a new career with a large corporation in the banking industry.He recently applied for the financial manager opening at G & T Bank.He is concerned that the transition from his small firm to a large corporation will be difficult.To better prepare himself for this change, he has decided to enroll in a few business classes to strengthen his understanding of corporate finance.The business classes have proven to be a valuable tool for learning the critical skills needed to fully understand a financial plan, equity financing, and debt financing.Morgan now believes he has strengthened his competitive advantage in his quest for the job.
-Refer to Morgan's Transition.When Morgan has to counsel clients on short-term versus long-term financing needs, which of the following should he identify as a short-term financing need?

Accepted Answer

A)  Speculative production 
B)  Business start-up costs 
C)  Acquisitions and mergers 
D)  Replacement of equipment 
E)  Expansion of facilities 
A)  Speculative production 
B)  Business start-up costs 
C)  Acquisitions and mergers 
D)  Replacement of equipment 
E)  Expansion of facilities

Question 5

Commercial paper short-term financing is usually available only to large firms.

Accepted Answer

A) True 
 B)False

Question 6

Debt capital is borrowed money that does not have to be repaid.

Accepted Answer

A) True 
 B)False

Question 7

The most basic form of ownership in a corporation is

Accepted Answer

A)  ordinary share. 
B)  bonds. 
C)  preferred stock. 
D)  debentures. 
E)  dividends. 
A)  ordinary share. 
B)  bonds. 
C)  preferred stock. 
D)  debentures. 
E)  dividends.

Question 8

Florida-based Swim and Fin Products often experiences a time lag between the time goods are produced and the time that retailers pay for the finished products.In this situation, Swim and Fin's financial problems are the result of speculative production.

Accepted Answer

A) True 
 B)False

Question 9

Trustee bonds refer to corporate bonds that are secured by various assets of the issuing firm.

Accepted Answer

A) True 
 B)False

Question 10

To raise capital, Financial Fusion sold

Accepted Answer

A)  stock to family members and friends. 
B)  stock to stockholders by using an IPO. 
C)  bonds to a few close associates. 
D)  commercial paper certificates to clients. 
E)  promissory notes to a few trustworthy investors. 
A)  stock to family members and friends. 
B)  stock to stockholders by using an IPO. 
C)  bonds to a few close associates. 
D)  commercial paper certificates to clients. 
E)  promissory notes to a few trustworthy investors.

Question 11

Sally Overall is thinking about two different decisions.One decision is quite risky, while the other decision is more conservative.To help her make the right decision, she decides to calculate the

Accepted Answer

A)  quick ratio. 
B)  management analysis. 
C)  money factor. 
D)  risk-return ratio. 
E)  entrepreneurial ratio. 
A)  quick ratio. 
B)  management analysis. 
C)  money factor. 
D)  risk-return ratio. 
E)  entrepreneurial ratio.

Question 12

During 2011, Bedford Technology sold ordinary share for the first time to whoever wanted to buy it.This was the ____ for Bedford.

Accepted Answer

A)  public stock sale 
B)  preferred stock offering 
C)  initial public offering 
D)  stock dividend 
E)  par value 
A)  public stock sale 
B)  preferred stock offering 
C)  initial public offering 
D)  stock dividend 
E)  par value

Question 13

Which of the following firms is most likely to receive venture capital?

Accepted Answer

A)  Virtual reality Internet company 
B)  Laundromat 
C)  Local fast-food restaurant 
D)  Book retailer 
E)  Convenience store 
A)  Virtual reality Internet company 
B)  Laundromat 
C)  Local fast-food restaurant 
D)  Book retailer 
E)  Convenience store

Question 14

Tidewater Distributors is successfully using short-term financing to buy inventory for resale.As sales climb, the managers realise that they must decide what to do with the money.Since you are the financial manager, they ask for your advice.You advise them to first

Accepted Answer

A)  repay the short-term obligations out of the sales revenue. 
B)  use the money to buy a yacht for the managers. 
C)  increase all employees' wages. 
D)  enroll all the salespeople in a sales training course. 
E)  borrow more money. 
A)  repay the short-term obligations out of the sales revenue. 
B)  use the money to buy a yacht for the managers. 
C)  increase all employees' wages. 
D)  enroll all the salespeople in a sales training course. 
E)  borrow more money.

Question 15

Downing, Inc., issues bonds to purchase new machinery for its factories.These bonds are secured by the machinery purchased with the proceeds of the bond issue.These are ____ bonds.

Accepted Answer

A)  Debenture 
B)  Mortgage 
C)  convertible 
D)  Indenture 
E)  sinking fund 
A)  Debenture 
B)  Mortgage 
C)  convertible 
D)  Indenture 
E)  sinking fund

Question 16

A factor will buy accounts receivable for

Accepted Answer

A)  more than their face value. 
B)  less than their face value. 
C)  their present value. 
D)  their par value. 
E)  the interest that can be collected from them. 
A)  more than their face value. 
B)  less than their face value. 
C)  their present value. 
D)  their par value. 
E)  the interest that can be collected from them.

Question 17

One of the concerns that large corporations have when they use equity financing is the need to repay the principal plus the interest at a future date.

Accepted Answer

A) True 
 B)False

Question 18

How many times can a corporation's stock be sold in the primary market?

Accepted Answer

A)  Once 
B)  Twice 
C)  A maximum of three times 
D)  Once per year 
E)  Unlimited 
A)  Once 
B)  Twice 
C)  A maximum of three times 
D)  Once per year 
E)  Unlimited

Question 19

A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.

Accepted Answer

A) True 
 B)False

Question 20

All of the activities concerned with obtaining money and using it effectively are called

Accepted Answer

A)  financial management. 
B)  long-term financing. 
C)  budgeting. 
D)  financial planning. 
E)  unsecured financing. 
A)  financial management. 
B)  long-term financing. 
C)  budgeting. 
D)  financial planning. 
E)  unsecured financing.

A tool that managers use to estimate major expenditures for assets, expansion of facilities, and mergers and acquisitions is called a(n)

Suppose IBM decided to issue commercial paper in denominations of €5,000 to raise a large sum of money.Since the commercial paper is secured only by IBM's reputation,

Commercial paper usually is issued

Commercial paper short-term financing is usually available only to large firms.

Debt capital is borrowed money that does not have to be repaid.

The most basic form of ownership in a corporation is

Florida-based Swim and Fin Products often experiences a time lag between the time goods are produced and the time that retailers pay for the finished products.In this situation, Swim and Fin's financial problems are the result of speculative production.

Trustee bonds refer to corporate bonds that are secured by various assets of the issuing firm.

To raise capital, Financial Fusion sold

Sally Overall is thinking about two different decisions.One decision is quite risky, while the other decision is more conservative.To help her make the right decision, she decides to calculate the

During 2011, Bedford Technology sold ordinary share for the first time to whoever wanted to buy it.This was the ____ for Bedford.

Which of the following firms is most likely to receive venture capital?

Tidewater Distributors is successfully using short-term financing to buy inventory for resale.As sales climb, the managers realise that they must decide what to do with the money.Since you are the financial manager, they ask for your advice.You advise them to first

Downing, Inc., issues bonds to purchase new machinery for its factories.These bonds are secured by the machinery purchased with the proceeds of the bond issue.These are ____ bonds.

A factor will buy accounts receivable for

One of the concerns that large corporations have when they use equity financing is the need to repay the principal plus the interest at a future date.

How many times can a corporation's stock be sold in the primary market?

A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.

All of the activities concerned with obtaining money and using it effectively are called

Introduction to Business

Responsible Business

Global Business

Types of Business Ownership

Small Business, Entrepreneurship, and Franchises

Leadership and Managing a Business

Flexibility Within the Organisation

Products and Services

Recruitment and Retaining the Best Employees

Employee Motivation and Team Building

The Marketing Concept

Aproduct Development and Pricing Strategies

Marketing Channels

Marketing Communications

Social Media and E-Business

Introduction to Management Accounting

Money and the Banking System

Personal Finances and Investments

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Exam 18: Financial Management

A tool that managers use to estimate major expenditures for assets, expansion of facilities, and mergers and acquisitions is called a(n)

Suppose IBM decided to issue commercial paper in denominations of €5,000 to raise a large sum of money.Since the commercial paper is secured only by IBM's reputation,

Commercial paper usually is issued

Commercial paper short-term financing is usually available only to large firms.

Debt capital is borrowed money that does not have to be repaid.

The most basic form of ownership in a corporation is

Florida-based Swim and Fin Products often experiences a time lag between the time goods are produced and the time that retailers pay for the finished products.In this situation, Swim and Fin's financial problems are the result of speculative production.

Trustee bonds refer to corporate bonds that are secured by various assets of the issuing firm.

To raise capital, Financial Fusion sold

Sally Overall is thinking about two different decisions.One decision is quite risky, while the other decision is more conservative.To help her make the right decision, she decides to calculate the

During 2011, Bedford Technology sold ordinary share for the first time to whoever wanted to buy it.This was the ____ for Bedford.

Which of the following firms is most likely to receive venture capital?

Tidewater Distributors is successfully using short-term financing to buy inventory for resale.As sales climb, the managers realise that they must decide what to do with the money.Since you are the financial manager, they ask for your advice.You advise them to first

Downing, Inc., issues bonds to purchase new machinery for its factories.These bonds are secured by the machinery purchased with the proceeds of the bond issue.These are ____ bonds.

A factor will buy accounts receivable for

One of the concerns that large corporations have when they use equity financing is the need to repay the principal plus the interest at a future date.

How many times can a corporation's stock be sold in the primary market?

A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.

All of the activities concerned with obtaining money and using it effectively are called

Introduction to Business

Responsible Business

Global Business

Types of Business Ownership

Small Business, Entrepreneurship, and Franchises

Leadership and Managing a Business

Flexibility Within the Organisation

Products and Services

Recruitment and Retaining the Best Employees

Employee Motivation and Team Building

The Marketing Concept

Aproduct Development and Pricing Strategies

Marketing Channels

Marketing Communications

Social Media and E-Business

Introduction to Management Accounting

Money and the Banking System

Personal Finances and Investments

Filters