Question 1

Which of these statements about corporate bonds is correct?

Accepted Answer

A)  Bonds provide equity financing. 
B)  Issuing new bonds dilutes the existing ownership in the firm. 
C)  Interest paid to bondholders represents a tax-deductible business expense. 
D)  Debenture bonds require assets pledged as collateral. 
A)  Bonds provide equity financing. 
B)  Issuing new bonds dilutes the existing ownership in the firm. 
C)  Interest paid to bondholders represents a tax-deductible business expense. 
D)  Debenture bonds require assets pledged as collateral.

Question 2

According to the risk/return trade-off, the higher the risk, the lower the interest rate charged by the lender.

Accepted Answer

A) True 
 B)False

Question 3

To be effective, budgets are prepared independently of organizational forecasts.

Accepted Answer

A) True 
 B)False

Question 4

Financial managers examine the data prepared by accountants and make recommendations to top management regarding strategies for improving the financial performance of the company.

Accepted Answer

A) True 
 B)False

Question 5

Most companies require long-term capital to purchase fixed assets such as plant and equipment, to develop new products and services, or to finance an expansion.

Accepted Answer

A) True 
 B)False

Question 6

By selling shares of ownership in their company, Seattle Scientific acquires the funds needed to finance their research and development projects. Seattle Scientific provides for their long-term funding needs through ________ financing.

Accepted Answer

A)  debt 
B)  equity 
C)  retained 
D)  asset 
A)  debt 
B)  equity 
C)  retained 
D)  asset

Question 7

A(n) ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

Accepted Answer

A)  managerial accountant 
B)  tax accountant 
C)  bookkeeper 
D)  internal auditor 
A)  managerial accountant 
B)  tax accountant 
C)  bookkeeper 
D)  internal auditor

Question 8

A line of credit is a given amount of unsecured short-term funds a bank will lend to a business.

Accepted Answer

A) True 
 B)False

Question 9

A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

Accepted Answer

A) True 
 B)False

Question 10

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Accepted Answer

A) True 
 B)False

Question 11

Factoring refers to the process of selling inventory to generate short-term funds.

Accepted Answer

A) True 
 B)False

Question 12

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

Accepted Answer

A) True 
 B)False

Question 13

The terms of the agreement in a bond issue are referred to as the

Accepted Answer

A)  articles of the issue. 
B)  terms of indebtedness. 
C)  bond specifications. 
D)  indenture terms. 
A)  articles of the issue. 
B)  terms of indebtedness. 
C)  bond specifications. 
D)  indenture terms.

Question 14

Which of the following statements about taxes is accurate?

Accepted Answer

A)  Taxes represent an inflow of cash to the firm. 
B)  Profitable businesses usually pay taxes. 
C)  Tax management falls within the responsibility of marketing managers. 
D)  Taxes cannot be managed because of fluctuations in political policy. 
A)  Taxes represent an inflow of cash to the firm. 
B)  Profitable businesses usually pay taxes. 
C)  Tax management falls within the responsibility of marketing managers. 
D)  Taxes cannot be managed because of fluctuations in political policy.

Question 15

Financial managers generally oppose credit sales because of the impact on cash flows.

Accepted Answer

A) True 
 B)False

Question 16

By identifying variances from the financial plan, managers are able to focus on those departments that require corrective action.

Accepted Answer

A) True 
 B)False

Question 17

Acquiring funds through borrowing represents

Accepted Answer

A)  debt financing. 
B)  venture capital. 
C)  speculative capital. 
D)  equity financing. 
A)  debt financing. 
B)  venture capital. 
C)  speculative capital. 
D)  equity financing.

Question 18

What is financial management? Identify the duties and responsibilities of financial managers.

Accepted Answer

Financial management is the job of manag

Question 19

Which of these is backed only by the reputation of the issuer?

Accepted Answer

A)  venture capital 
B)  secured bonds 
C)  debenture bonds 
D)  long-term financing 
A)  venture capital 
B)  secured bonds 
C)  debenture bonds 
D)  long-term financing

Question 20

Which of the following activities is most likely to be performed by a financial manager?

Accepted Answer

A)  design of a marketable product that satisfies an unmet need 
B)  identification of specific target markets for a firm's goods 
C)  preparation of the balance sheet and income statement for the firm 
D)  analysis of the tax implications of various managerial decisions 
A)  design of a marketable product that satisfies an unmet need 
B)  identification of specific target markets for a firm's goods 
C)  preparation of the balance sheet and income statement for the firm 
D)  analysis of the tax implications of various managerial decisions

Exam 18: Financial Management

Which of these statements about corporate bonds is correct?

According to the risk/return trade-off, the higher the risk, the lower the interest rate charged by the lender.

To be effective, budgets are prepared independently of organizational forecasts.

Financial managers examine the data prepared by accountants and make recommendations to top management regarding strategies for improving the financial performance of the company.

Most companies require long-term capital to purchase fixed assets such as plant and equipment, to develop new products and services, or to finance an expansion.

By selling shares of ownership in their company, Seattle Scientific acquires the funds needed to finance their research and development projects. Seattle Scientific provides for their long-term funding needs through ________ financing.

A(n) ________ is responsible for verifying that the accounting procedures within a firm are consistent with established accounting principles.

A line of credit is a given amount of unsecured short-term funds a bank will lend to a business.

A line of credit from a bank guarantees a firm that a specified amount of financing will be available when it is needed.

Inventory financing represents the selling of accounts receivables as collateral for a loan.

Factoring refers to the process of selling inventory to generate short-term funds.

The overall objective of financial planning is to optimize the firm's profitability and make the best use of its money.

The terms of the agreement in a bond issue are referred to as the

Which of the following statements about taxes is accurate?

Financial managers generally oppose credit sales because of the impact on cash flows.

By identifying variances from the financial plan, managers are able to focus on those departments that require corrective action.

Acquiring funds through borrowing represents

What is financial management? Identify the duties and responsibilities of financial managers.

Which of these is backed only by the reputation of the issuer?

Which of the following activities is most likely to be performed by a financial manager?

Taking Risks and Making Profits Within the Dynamic Business Environment

Understanding Economics and How It Affects Business

Doing Business in Global Markets

Demanding Ethical and Socially Responsible Behavior

How to Form a Business

Entrepreneurship and Starting a Small Business

Management and Leadership

Structuring Organizations for Todays Challenges

Production and Operations Management

Motivating Employees

Human Resource Management: Finding and Keeping the Best Employees

Dealing With Employeemanagement Issues

Marketing: Helping Buyers Buy

Developing and Pricing Goods and Services

Distributing Products

Using Effective Promotions

Understanding Accounting and Financial Information

Using Securities Markets for Financing and Investing Opportunities

Money, Financial Institutions, and the Federal Reserve

Working Within the Legal Environment

Using Technology to Manage Information

Managing Risk

Managing Personal Finances

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