Question 1

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Accepted Answer

A) True 
 B)False

Question 2

Budget reflects expected revenues,cash receipts,and outlays.

Accepted Answer

A) True 
 B)False

Question 3

________ is an agreement to use an asset in exchange for regular payment.

Accepted Answer

A)  Credit card 
B)  Lease 
C)  Mortgage 
D)  Trade credit 
E)  Commercial paper 
A)  Credit card 
B)  Lease 
C)  Mortgage 
D)  Trade credit 
E)  Commercial paper

Question 4

With most bond issues,a corporation retains the right to pay off the bonds before maturity.Such bonds are called ________.

Accepted Answer

A)  secured bonds 
B)  fixed bonds 
C)  debentures 
D)  callable bonds 
E)  convertible bonds 
A)  secured bonds 
B)  fixed bonds 
C)  debentures 
D)  callable bonds 
E)  convertible bonds

Question 5

Equity financing refers to arranging funding by ________.

Accepted Answer

A)  borrowing money from institutions 
B)  selling corporate bonds 
C)  selling shares ownership 
D)  issuing commercial papers 
E)  borrowing money from individuals 
A)  borrowing money from institutions 
B)  selling corporate bonds 
C)  selling shares ownership 
D)  issuing commercial papers 
E)  borrowing money from individuals

Question 6

Duromart is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores.Which of the following actions of Duromart is an example of availing short-term credit?

Accepted Answer

A)  The company issues bonds with a face value of $10 to raise money. 
B)  The company issues debentures that offer 8 percent interest. 
C)  The company pledges its assets to obtain a mortgage loan. 
D)  The company opens a trade credit account with a major bank. 
E)  The company leases a plot of land that it owns to raise money. 
A)  The company issues bonds with a face value of $10 to raise money. 
B)  The company issues debentures that offer 8 percent interest. 
C)  The company pledges its assets to obtain a mortgage loan. 
D)  The company opens a trade credit account with a major bank. 
E)  The company leases a plot of land that it owns to raise money.

Question 7

Explain why companies form hedging agreements with their suppliers.

Accepted Answer

Companies protect themselves against fut

Question 8

Hedging refers to selling a product at a higher rate than what was determined.

Accepted Answer

A) True 
 B)False

Question 9

Frost Bank lends $500,000 to Arbex Manufacturer.Arbex has agreed to pay this amount back in fifty equal installments over a period of ten years.This is an example of a ________.

Accepted Answer

A)  lease agreement 
B)  trade credit 
C)  corporate bond 
D)  long-term loan 
E)  commercial paper 
A)  lease agreement 
B)  trade credit 
C)  corporate bond 
D)  long-term loan 
E)  commercial paper

Question 10

Financing would cost more if ________.

Accepted Answer

A)  opportunity cost is low for the financier 
B)  investors lend less money 
C)  funding is for long-term 
D)  perceived risk is less 
E)  a company is financially solid 
A)  opportunity cost is low for the financier 
B)  investors lend less money 
C)  funding is for long-term 
D)  perceived risk is less 
E)  a company is financially solid

Question 11

Accounts receivable refers to ________.

Accepted Answer

A)  the total of owner's funds invested in a business 
B)  the total annual revenue of a company 
C)  amounts that a firm owes to other parties 
D)  the money owed to a firm by its customers 
E)  the total interest payments made by the firm 
A)  the total of owner's funds invested in a business 
B)  the total annual revenue of a company 
C)  amounts that a firm owes to other parties 
D)  the money owed to a firm by its customers 
E)  the total interest payments made by the firm

Question 12

Venture capital is one of the least specialized and most widely available forms of funding.

Accepted Answer

A) True 
 B)False

Question 13

Compare and contrast secured loans and unsecured loans.

Accepted Answer

Secured loans are loans backed up with a

Question 14

Term bonds are bonds that ________.

Accepted Answer

A)  mature all at the same time 
B)  can be paid off when needed 
C)  mature four times a year 
D)  mature at various times 
E)  are backed by company-owned property 
A)  mature all at the same time 
B)  can be paid off when needed 
C)  mature four times a year 
D)  mature at various times 
E)  are backed by company-owned property

Question 15

DS Bank is a bank specialized in buying shares of ownership from firms that want to sell it to investors.The bank sells the shares to investors on the company's behalf.DS Bank is a(n)________.

Accepted Answer

A)  financial renovator 
B)  controller 
C)  treasurer 
D)  underwriter 
E)  non-banking firm 
A)  financial renovator 
B)  controller 
C)  treasurer 
D)  underwriter 
E)  non-banking firm

Question 16

________ refers to the rate at which the company is using up the funds from its initial investors.

Accepted Answer

A)  Capital ratio 
B)  Order rate 
C)  Hedge rate 
D)  Burn rate 
E)  Current ratio 
A)  Capital ratio 
B)  Order rate 
C)  Hedge rate 
D)  Burn rate 
E)  Current ratio

Question 17

________ accounts represent a firm's cash on hand as well as economic value that can be converted to cash or is expected from customers,minus what it is scheduled to pay out.

Accepted Answer

A)  Capital budget 
B)  Trade credit 
C)  Project budget 
D)  Working capital 
E)  Operating budget 
A)  Capital budget 
B)  Trade credit 
C)  Project budget 
D)  Working capital 
E)  Operating budget

Question 18

________ is the average rate of interest a firm pays on its combination of debt and equity.

Accepted Answer

A)  Economic surplus 
B)  Marginal cost 
C)  Working capital 
D)  Cost of capital 
E)  Economic deficit 
A)  Economic surplus 
B)  Marginal cost 
C)  Working capital 
D)  Cost of capital 
E)  Economic deficit

Question 19

Which of the following sources of short-term debt is characterized by revolving credit terms?

Accepted Answer

A)  unsecured loan 
B)  secured loan 
C)  trade credit 
D)  credit card 
E)  commercial paper 
A)  unsecured loan 
B)  secured loan 
C)  trade credit 
D)  credit card 
E)  commercial paper

Question 20

Financial decisions with high perceived risk will have low potential for rewards.

Accepted Answer

A) True 
 B)False

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Budget reflects expected revenues,cash receipts,and outlays.

________ is an agreement to use an asset in exchange for regular payment.

With most bond issues,a corporation retains the right to pay off the bonds before maturity.Such bonds are called ________.

Equity financing refers to arranging funding by ________.

Duromart is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores.Which of the following actions of Duromart is an example of availing short-term credit?

Explain why companies form hedging agreements with their suppliers.

Hedging refers to selling a product at a higher rate than what was determined.

Frost Bank lends $500,000 to Arbex Manufacturer.Arbex has agreed to pay this amount back in fifty equal installments over a period of ten years.This is an example of a ________.

Financing would cost more if ________.

Accounts receivable refers to ________.

Venture capital is one of the least specialized and most widely available forms of funding.

Compare and contrast secured loans and unsecured loans.

Term bonds are bonds that ________.

DS Bank is a bank specialized in buying shares of ownership from firms that want to sell it to investors.The bank sells the shares to investors on the company's behalf.DS Bank is a(n)________.

________ refers to the rate at which the company is using up the funds from its initial investors.

________ accounts represent a firm's cash on hand as well as economic value that can be converted to cash or is expected from customers,minus what it is scheduled to pay out.

________ is the average rate of interest a firm pays on its combination of debt and equity.

Which of the following sources of short-term debt is characterized by revolving credit terms?

Financial decisions with high perceived risk will have low potential for rewards.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters

Exam 18: Financial Management

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Budget reflects expected revenues,cash receipts,and outlays.

________ is an agreement to use an asset in exchange for regular payment.

With most bond issues,a corporation retains the right to pay off the bonds before maturity.Such bonds are called ________.

Equity financing refers to arranging funding by ________.

Duromart is an American multinational retailer corporation that runs chains of large discount department stores and warehouse stores.Which of the following actions of Duromart is an example of availing short-term credit?

Explain why companies form hedging agreements with their suppliers.

Hedging refers to selling a product at a higher rate than what was determined.

Frost Bank lends $500,000 to Arbex Manufacturer.Arbex has agreed to pay this amount back in fifty equal installments over a period of ten years.This is an example of a ________.

Financing would cost more if ________.

Accounts receivable refers to ________.

Venture capital is one of the least specialized and most widely available forms of funding.

Compare and contrast secured loans and unsecured loans.

Term bonds are bonds that ________.

DS Bank is a bank specialized in buying shares of ownership from firms that want to sell it to investors.The bank sells the shares to investors on the company's behalf.DS Bank is a(n)________.

________ refers to the rate at which the company is using up the funds from its initial investors.

________ accounts represent a firm's cash on hand as well as economic value that can be converted to cash or is expected from customers,minus what it is scheduled to pay out.

________ is the average rate of interest a firm pays on its combination of debt and equity.

Which of the following sources of short-term debt is characterized by revolving credit terms?

Financial decisions with high perceived risk will have low potential for rewards.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters