Question 1

Rhonda has a ________ account, which gives her an interest rate competitive with those of brokerage firm money market funds but requires a higher minimum balance and limits check writing to three per month.

Accepted Answer

A)  checking 
B)  savings 
C)  NOW 
D)  money market 
E)  certificate of deposit

Question 2

A ________ is an account that pays interest and allows you to write an unlimited number of checks, but you have to maintain a minimum monthly balance.

Accepted Answer

A)  checking account 
B)  savings account 
C)  NOW account 
D)  money market account 
E)  certificate of deposit

Question 3

When Michael started his construction company, he needed to purchase some very expensive excavating equipment, but he didn't have the cash on hand to do so. He borrowed from the bank to cover this ________ expenditure.

Accepted Answer

A)  short-term 
B)  capital 
C)  intangible 
D)  principal 
E)  inventory

Question 4

Algorithm Computers needs to borrow money to pay for an addition to its training facility. The owners approach their bank, but their application for a long-term loan is denied. They decide to issue corporate bonds to the public instead. The company has a strong reputation but is unable to provide collateral for the bonds it sells. The bonds in this example are most likely ________ and would be described as a form of ________.

Accepted Answer

A)  indenture bonds; equity financing 
B)  debenture bonds; peer-to-peer financing 
C)  unsecured bonds; initial public offering 
D)  secured bonds; crowdfunding 
E)  debenture bonds; debt financing

Question 5

Determining long-term investments and planning the expenditure of funds are part of

Accepted Answer

A)  the accounting equation. 
B)  monetary practices. 
C)  financial management. 
D)  financial accounting. 
E)  managerial accounting.

Question 6

I'SCream makes a variety of healthy alternatives to dairy-based ice cream. One of its most popular styles of ice cream utilizes avocado milk for the main ingredient. Avocados take a long time to ship, so I'SCream will often borrow money from its bank to facilitate larger orders of avocados. Which of the reasons firms borrow money does thisbest demonstrate?

Accepted Answer

A)  funds for making major investments 
B)  funds for keeping enough product available 
C)  funds for extending credit 
D)  funds for requesting a line of credit 
E)  funds for managing everyday business activities

Question 7

Tatjana received $100 for her birthday last week. She spent $50 on a new video game and put the other $50 aside for a vacation she has planned next month. The money she savedbest represents which function of money?

Accepted Answer

A)  store of wealth 
B)  means of leverage 
C)  standard of value 
D)  terms of interest 
E)  medium of exchange

Question 8

Joe's Barber Shop gives free haircuts to Manny, who brings Joe a free pastrami sandwich on Fridays. This demonstrates the concept of

Accepted Answer

A)  crowdfunding. 
B)  bartering. 
C)  a transaction loan. 
D)  a financial exchange. 
E)  networking.

Question 9

In a ________, a bank specifies how much it is willing to lend the borrower during a specified period of time, although the bank does not guarantee the loan.

Accepted Answer

A)  revolving credit agreement 
B)  lay away plan 
C)  line of credit 
D)  transaction loan 
E)  credit card advance

Question 10

Dex is the CFO for Trask Enterprises. He is meeting with the CEO and other members of the leadership team to create a formal plan for helping Trask to meet its financial objectives. Dex ismost likely assisting with a

Accepted Answer

A)  financial plan. 
B)  credit index. 
C)  balance sheet. 
D)  treasury index. 
E)  capital budget.

Question 11

A ________ forecast is a prediction about how money will come into and go out of a firm in the near future, usually the next 1-3 months, and are based on anticipated sales and expenses.

Accepted Answer

A)  cash flow 
B)  short-term 
C)  long-term 
D)  budgeting 
E)  controls

Question 12

Antoinette wants to take out a mortgage. Her friend recommended she look into her bank, so Antoinette decided to do some research. Everything appeared to be the same except her friend's bank appeared to be owned by depositors rather than shareholders. Antoinette's friendmost likely recommended a

Accepted Answer

A)  savings and loan association. 
B)  brokerage firm. 
C)  demand deposit institution. 
D)  mutual savings bank. 
E)  credit union.

Question 13

Lahn placed $100 in a certificate of deposit. After three years he received 10 percent interest on the $100. This is an example of a ________ deposit, which can be further classified as a form of ________.

Accepted Answer

A)  demand; M1 
B)  bond; NOW 
C)  time; M2 
D)  paper; M1 
E)  promissory; M2

Question 14

Which activity represents a way that a commercial bank might make money?

Accepted Answer

A)  extending trade credit 
B)  providing a discount rate 
C)  decreasing the reserve requirement 
D)  offering life insurance 
E)  eliminating loan interest

Question 15

Shan is responsible for managing the accounts payable team for her Signal Signage Company. She ensures the team does not make payments immediately after receiving an invoice, while also ensuring that payment due dates are not missed. Why would Shan manage the accounts payable process in this manner?

Accepted Answer

A)  to eliminate trade credit and maximize investment returns 
B)  to decrease interest fees and increase leverage 
C)  to reduce solvency and improve profitability 
D)  to avoid interest fees and allow for investment returns 
E)  to minimize taxes and avoid interest fees

Question 16

Tra's Tree Trimming Company is always able to pay its bills on time or before they are due. Thisbest demonstrates the concept of

Accepted Answer

A)  efficiency. 
B)  solvency. 
C)  strategy. 
D)  transparency. 
E)  profitability.

Question 17

The end goal of financial management is

Accepted Answer

A)  solvency. 
B)  efficiency. 
C)  effectiveness. 
D)  profitability. 
E)  viability.

Question 18

The market is currently seeing lower interest rates and increased economic growth. Which Fed tool for controlling the money supply wasmost likely used to cause this to occur?

Accepted Answer

A)  They purchased bonds from the public. 
B)  They increased the discount rate. 
C)  They increased the reserve requirement. 
D)  They sold bonds to the public. 
E)  They decreased EFT fees.

Question 19

Jasper started a new position last year. Since starting, he has been responsible for obtaining sufficient funds to complete several important projects for his employer. Jaspermost likely works in the field of ________ management.

Accepted Answer

A)  capital gains 
B)  entrepreneurial 
C)  financial 
D)  accounting 
E)  treasury returns

Question 20

A ________ is credit extended by a bank for a specific purpose, such as for constructing a new store or stocking up on new inventory for the season.

Accepted Answer