Question 1

All of the following are non-hedging strategies that can be used to manage business risk EXCEPT:

Accepted Answer

A) acquisition of additional information 
B) forward contracts 
C) diversification 
D) insurance 
A) acquisition of additional information 
B) forward contracts 
C) diversification 
D) insurance

Question 2

List several reasons why a firm may choose to employ risk management techniques.

Accepted Answer

1.Reduce the chance for financial distre

Question 3

Some reasons to manage risk by hedging are which of the following?
I.Ability to have needed cash flows.
II.Reduce the chance of financial loss

Accepted Answer

A) Only statement I is correct 
B) Only statement II is correct 
C) Both statements I and II are correct 
D) Neither statement I nor II is correct 
A) Only statement I is correct 
B) Only statement II is correct 
C) Both statements I and II are correct 
D) Neither statement I nor II is correct

Question 4

Firms work to diversify.All of the following are diversification methods that firms use EXCEPT:

Accepted Answer

A) Firms seek to expand the customer base. 
B) Firms seek to obtain raw materials from a number of suppliers. 
C) Firms seek to isolate their product by selling to a single niche market. 
D) Firms seek to produce more than one product. 
A) Firms seek to expand the customer base. 
B) Firms seek to obtain raw materials from a number of suppliers. 
C) Firms seek to isolate their product by selling to a single niche market. 
D) Firms seek to produce more than one product.

Question 5

A long hedge requires a futures contract

Accepted Answer

A) the creation of 
B) the selling of 
C) the buying of 
D) margining 
A) the creation of 
B) the selling of 
C) the buying of 
D) margining

Question 6

All of the following are derivative securities EXCEPT:

Accepted Answer

A) Forwards 
B) Margins 
C) Futures 
D) Options 
A) Forwards 
B) Margins 
C) Futures 
D) Options

Question 7

A "clearinghouse" operated by the futures exchange handles:

Accepted Answer

A) the offices of the future contract buyers. 
B) the location of the future contract sellers. 
C) the payments between buyers and sellers. 
D) the actual products bought and sold. 
A) the offices of the future contract buyers. 
B) the location of the future contract sellers. 
C) the payments between buyers and sellers. 
D) the actual products bought and sold.

Question 8

Marking to market is a procedure for contracts.

Accepted Answer

A) futures 
B) forwards 
C) margin 
D) implied 
A) futures 
B) forwards 
C) margin 
D) implied

Question 9

Financial derivatives can be used to manage all of the following risks EXCEPT:

Accepted Answer

A) earnings risks 
B) currency risks 
C) pricing risks 
D) interest rate risks 
A) earnings risks 
B) currency risks 
C) pricing risks 
D) interest rate risks

All of the following are non-hedging strategies that can be used to manage business risk EXCEPT:

List several reasons why a firm may choose to employ risk management techniques.

Some reasons to manage risk by hedging are which of the following? I.Ability to have needed cash flows. II.Reduce the chance of financial loss

Firms work to diversify.All of the following are diversification methods that firms use EXCEPT:

A long hedge requires a futures contract

All of the following are derivative securities EXCEPT:

A "clearinghouse" operated by the futures exchange handles:

Marking to market is a procedure for contracts.

Financial derivatives can be used to manage all of the following risks EXCEPT:

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

A: The Time Value of Money

Fixed-Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

A: Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital, Capital Structure, and Dividend Policy

Capital Structure Concepts

Capital Structure Management in Practice

A: Capital Structure Management in Practice

Dividend Policy

Working Capital Management

The Management of Cash and Marketable Securities

The Management of Accounts Receivable and Inventories

Lease and Intermediate-Term Financing

Financing with Derivatives

A: Financing with Derivatives

International Financial Management

Corporate Restructuring

Filters

Exam 21: Risk Management

All of the following are non-hedging strategies that can be used to manage business risk EXCEPT:

List several reasons why a firm may choose to employ risk management techniques.

Some reasons to manage risk by hedging are which of the following? I.Ability to have needed cash flows. II.Reduce the chance of financial loss

Firms work to diversify.All of the following are diversification methods that firms use EXCEPT:

A long hedge requires a futures contract

All of the following are derivative securities EXCEPT:

A "clearinghouse" operated by the futures exchange handles:

Marking to market is a procedure for contracts.

Financial derivatives can be used to manage all of the following risks EXCEPT:

The Role and Objective of Financial Management

The Domestic and International Financial Marketplace

Evaluation of Financial Performance

Financial Planning and Forecasting

The Time Value of Money

A: The Time Value of Money

Fixed-Income Securities: Characteristics and Valuation

Common Stock: Characteristics, Valuation, and Issuance

Analysis of Risk and Return

Capital Budgeting and Cash Flow Analysis

Capital Budgeting: Decision Criteria and Real Option Considerations

A: Capital Budgeting: Decision Criteria and Real Option Considerations

Capital Budgeting and Risk

The Cost of Capital, Capital Structure, and Dividend Policy

Capital Structure Concepts

Capital Structure Management in Practice

A: Capital Structure Management in Practice

Dividend Policy

Working Capital Management

The Management of Cash and Marketable Securities

The Management of Accounts Receivable and Inventories

Lease and Intermediate-Term Financing

Financing with Derivatives

A: Financing with Derivatives

International Financial Management

Corporate Restructuring

Filters