Exam 8: Finance: Acquiring and Using Funds to Maximize Value

During the dot-com boom-and-bust,a new ratio was used to keep track of how quickly firms were using up their cash balances.What was the term used to describe this ratio?

Leverage increases the expected return on paper of a shareholder's investments,but it also increases the firm's financial risk.

A money market mutual fund is a mutual fund that pools funds from many investors and uses the funds to purchase highly liquid short-term securities.

What is spontaneous financing? What is the most common source of this type of financing? If you see 2/10 net 30 on a shipment invoice,what does it tell the buyer about the payment terms?

When the goals of stakeholders conflict with each other,financial managers usually adopt the view that the preferences of internal stakeholders,such as managers and employees,should be given the most weight.

How are earnings per share calculated?

Which of the following is intended to protect creditors by preventing borrowers from pursuing policies that might jeopardize the lenders' funds?

Which of the following proposals would be considered under capital budgeting?

A corporation can raise additional equity financing by taking out a long-term loan from a bank.

Covenants are terms included in long-term loan agreements that are intended to protect borrowers from unfair policies imposed by lenders.

A wealthy relative promises to give you $5000 when you complete all of the college courses needed to earn a degree in business.The present value of this future sum must be which of the following?

What options do corporations have to acquire long-term debt financing?

Commercial paper is usually issued at a discount,meaning that it is initially sold at a lower price than the company will pay the holder when the paper comes due.

Each specific ratio developed by financial managers has a theoretically "ideal" value that financial managers strive to attain.

A line of credit is a financial arrangement between a firm and a bank in which the bank pre-approves credit up to a specified limit and guarantees that this credit will be available even if the borrower's credit rating deteriorates.

Name and discuss two main goals of finance.Are these goals mutually exclusive? Explain your answer.

What is the term for short-term unsecured promissory notes issued by financial institutions and other major corporations?

Historically,what has been the goal of financial management?

Explain how when a firm acts in a socially responsible manner,it can increase shareholder value.

When a firm reinvests some of its net income rather than distributing it all to owners,the result for the firm is an increase in which of the following?