Question 1

What is the purpose of a financial plan?

Accepted Answer

A financial plan is a document that specifies the funds a firm will need for a period of time, the timing of inflows and outflows, and the most appropriate uses of funds. Financial plans are often built around the answers to three questions: (1) What funds will the firm require during a period of time? (2) When will the firm need additional funds? and (3) Where will it obtain the necessary funds? A good financial plan also involves financial control-a process of checking actual revenues and expenses and comparing them against forecasts.

Question 2

Borrowing money _____.

Accepted Answer

A)  creates leverage 
B)  increases equity 
C)  decreases risk 
D)  reduces liquidity 
A)  creates leverage 
B)  increases equity 
C)  decreases risk 
D)  reduces liquidity A

Question 3

MATCHING
Complete the following using the terms listed.
-_____ raise money from wealthy individuals and institutional investors, and invest these funds in small, start-up companies.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds A

Question 4

MATCHING
Complete the following using the terms listed.
-A mix of a firm's debt and equity capital is _____.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 5

In a sense, a(n) ________ is the reverse of a merger.

Accepted Answer

A)  tender offer 
B)  leverage buyout 
C)  divestiture 
D)  acquisition 
A)  tender offer 
B)  leverage buyout 
C)  divestiture 
D)  acquisition

Question 6

If a firm has numerous investment opportunities and wishes to finance some of them with equity funding, it will likely pay large dividends to shareholders.

Accepted Answer

A) True 
 B)False

Question 7

Rhonda, a financial manager at TRM Inc., has to organize the finances of her company for one to two years. In the context of financial planning, she should develop a(n) _____ plan to accomplish this purpose.

Accepted Answer

A)  strategic 
B)  operating 
C)  security 
D)  leverage 
A)  strategic 
B)  operating 
C)  security 
D)  leverage

Question 8

MATCHING
Complete the following using the terms listed.
-A(n) _____ is a sale of assets by a company.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 9

All of the following are sources of short-term funds EXCEPT _____.

Accepted Answer

A)  commercial paper 
B)  trade credit 
C)  corporate bonds 
D)  bank loans 
A)  commercial paper 
B)  trade credit 
C)  corporate bonds 
D)  bank loans

Question 10

Corporate debt securities are the most common type of security sold privately.

Accepted Answer

A) True 
 B)False

Question 11

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

Accepted Answer

A) True 
 B)False

Question 12

The sovereign wealth fund is a variation of _____.

Accepted Answer

A)  market securities 
B)  private equity fund 
C)  private placements 
D)  debt capital 
A)  market securities 
B)  private equity fund 
C)  private placements 
D)  debt capital

Question 13

A balance sheet hedge provides a method for global companies to reduce risks associated with exchange rate fluctuations.

Accepted Answer

A) True 
 B)False

Question 14

MATCHING
Complete the following using the terms listed.
-_____ is the amount of assets needed to generate a given level of sales.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 15

The financial manager for a typical corporation is responsible for _____.

Accepted Answer

A)  designing the accounting system 
B)  gathering, recording, and reporting financial information 
C)  determining the most appropriate sources and uses of funds 
D)  preparing operating budgets for various departments 
A)  designing the accounting system 
B)  gathering, recording, and reporting financial information 
C)  determining the most appropriate sources and uses of funds 
D)  preparing operating budgets for various departments

Question 16

Explain the concept of risk-return trade-off.

Accepted Answer

Financial managers strive to maximize th

Question 17

Firms often rely on short-term sources of funds to pay for large, permanent assets, such as machinery and buildings.

Accepted Answer

A) True 
 B)False

Question 18

In a typical firm, the _____ is the chief accounting manager.

Accepted Answer

A)  chief executive officer 
B)  controller 
C)  treasurer 
D)  chief financial officer 
A)  chief executive officer 
B)  controller 
C)  treasurer 
D)  chief financial officer

Question 19

Which of the following individuals has the direct responsibility for shareholder relations?

Accepted Answer

A)  The controller 
B)  The chief financial officer 
C)  The chief executive officer 
D)  The treasurer 
A)  The controller 
B)  The chief financial officer 
C)  The chief executive officer 
D)  The treasurer

Question 20

Bond sales tend to be higher when interest rates are lower.

Accepted Answer

A) True 
 B)False

What is the purpose of a financial plan?

Borrowing money _____.

MATCHING Complete the following using the terms listed. -_____ raise money from wealthy individuals and institutional investors, and invest these funds in small, start-up companies.

MATCHING Complete the following using the terms listed. -A mix of a firm's debt and equity capital is _____.

In a sense, a(n) ________ is the reverse of a merger.

If a firm has numerous investment opportunities and wishes to finance some of them with equity funding, it will likely pay large dividends to shareholders.

Rhonda, a financial manager at TRM Inc., has to organize the finances of her company for one to two years. In the context of financial planning, she should develop a(n) _____ plan to accomplish this purpose.

MATCHING Complete the following using the terms listed. -A(n) _____ is a sale of assets by a company.

All of the following are sources of short-term funds EXCEPT _____.

Corporate debt securities are the most common type of security sold privately.

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

The sovereign wealth fund is a variation of _____.

A balance sheet hedge provides a method for global companies to reduce risks associated with exchange rate fluctuations.

MATCHING Complete the following using the terms listed. -_____ is the amount of assets needed to generate a given level of sales.

The financial manager for a typical corporation is responsible for _____.

Explain the concept of risk-return trade-off.

Firms often rely on short-term sources of funds to pay for large, permanent assets, such as machinery and buildings.

In a typical firm, the _____ is the chief accounting manager.

Which of the following individuals has the direct responsibility for shareholder relations?

Bond sales tend to be higher when interest rates are lower.

The Changing Face of Business

Business Ethics and Social Responsibility

Economic Challenges Facing Contemporary Business

Competing in World Markets

Forms of Business Ownership and Organization

Starting Your Own Business: the Entrepreneurship Alternative

Management, Leadership, and the Internal Organization

Human Resource Management: From Recruitment to Labor Relations

Top Performance Through Empowerment, Teamwork, and Communication

Production and Operations Management

Customer-Driven Marketing

Product and Distribution Strategies

Promotion and Pricing Strategies

Using Technology to Manage Information

Understanding Accounting and Financial Statements

The Financial System

Filters

Exam 17: Financial Management

What is the purpose of a financial plan?

Borrowing money _____.

MATCHING Complete the following using the terms listed. -_____ raise money from wealthy individuals and institutional investors, and invest these funds in small, start-up companies.

MATCHING Complete the following using the terms listed. -A mix of a firm's debt and equity capital is _____.

In a sense, a(n) ________ is the reverse of a merger.

If a firm has numerous investment opportunities and wishes to finance some of them with equity funding, it will likely pay large dividends to shareholders.

Rhonda, a financial manager at TRM Inc., has to organize the finances of her company for one to two years. In the context of financial planning, she should develop a(n) _____ plan to accomplish this purpose.

MATCHING Complete the following using the terms listed. -A(n) _____ is a sale of assets by a company.

All of the following are sources of short-term funds EXCEPT _____.

Corporate debt securities are the most common type of security sold privately.

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

The sovereign wealth fund is a variation of _____.

A balance sheet hedge provides a method for global companies to reduce risks associated with exchange rate fluctuations.

MATCHING Complete the following using the terms listed. -_____ is the amount of assets needed to generate a given level of sales.

The financial manager for a typical corporation is responsible for _____.

Explain the concept of risk-return trade-off.

Firms often rely on short-term sources of funds to pay for large, permanent assets, such as machinery and buildings.

In a typical firm, the _____ is the chief accounting manager.

Which of the following individuals has the direct responsibility for shareholder relations?

Bond sales tend to be higher when interest rates are lower.

The Changing Face of Business

Business Ethics and Social Responsibility

Economic Challenges Facing Contemporary Business

Competing in World Markets

Forms of Business Ownership and Organization

Starting Your Own Business: the Entrepreneurship Alternative

Management, Leadership, and the Internal Organization

Human Resource Management: From Recruitment to Labor Relations

Top Performance Through Empowerment, Teamwork, and Communication

Production and Operations Management

Customer-Driven Marketing

Product and Distribution Strategies

Promotion and Pricing Strategies

Using Technology to Manage Information

Understanding Accounting and Financial Statements

The Financial System

Filters