Exam 16: Financial Management and Securities Markets

When Frank's Fertilizer Company bills its customers, it has them send their payments to an address that is just for receiving payments, instead of directly to the company's mailing address. Although this system costs Frank's Fertilizer Company a lot of money, it is worth it because the company receives thousands of checks from customers each business day. What system is this company using to receive its payments?

Donna is an investor who wants to sell her stocks and bonds to other investors. Which market provides a mechanism for her to buy and sell stocks and bonds?

During 2007 and 2008, the market for which short-term investment stopped functioning and had to be rescued by the Federal Reserve?

The terms current and short term are used interchangeably when discussing assets and liabilities because these assets and liabilities

When Angelica started her own fabric company, she took out a loan from her local bank. Angelica took a second mortgage on her home as collateral for the loan. Which type of bank loan does this scenario best describe?

Dawn owns a hair salon and wants to open another store in the downtown shopping district. She goes to the bank to get a loan to start her business, and the bank gives her a loan that is backed by her good reputation and previous credit rating. Which type of bank loan does this scenario best describe?

Natalia is an investor who buys securities when everyone else is panicked and prices are low. As a result, she is considered a ________ investor.

Which statement is TRUE regarding capital budgeting?

Cecil is a dealer who trades small stocks and illiquid bank stocks using his computer. He trades with other dealers all over the country without having to go to a physical location. Which type of market does this scenario best describe?

Stitch and Sew is a garment manufacturing company. What would be a fixed asset for this company?

How is the dividend yield calculated?

Financial management is limited to business organizations.

Bill's Travel Company provides inexpensive bus trips to several large cities. This company's offices, buses, and bus depots are examples of its ________ assets.

Workplace Furniture is an e-commerce company that sells office furniture. In an attempt to raise long-term funds, the company decides to issue bonds to lenders. These bonds do not have fixed interest payments, and the rate of interest changes depending on economic conditions. The bonds issued by Workplace Furniture are examples of ________ bonds.

King Construction Company receives weekly shipments of lumber, vinyl siding, and stone slabs from one of its materials suppliers. Since King Construction Company is a regular customer, the supplier has made an agreement to give the company discounts if it pays its bill early. This is an example of

Fatima recently started her own tutoring firm to offer study help for high school students. To help finance her new business, which has a very limited track record, she issued bonds that offered relatively high rates of interest and had higher inherent risks. Which type of bond is Fatima most likely using in this scenario?

Isadora, a finance manager, is budgeting for the company's new line of production equipment. This equipment, which will be used for 20 years or more, is handled out of a(n) ________ budget.

A company invests its excess cash in a commercial certificate of deposit (CD). If a cash shortage occurs, what will the company most likely do?

To help itself succeed in the competitive technology marketplace, a company started selling bonds to raise long-term funds. What is the company most likely to do with regard to these bonds?

What is a difference between primary and secondary markets?