Question 1

Which of the following is correct with respect to chief financial officers (CFOs)?

Accepted Answer

A)  About 50 percent of CEOs were formerly CFOs. 
B)  CFOs do much more than simply focus on financial documents. 
C)  In recent years, fewer CFOs have been appointed as chief executives officers (CEOs). 
D)  The skill set of CFOs is narrowing because they have to sharpen their focus on financial issues. 
E)  All of these are correct. 
A)  About 50 percent of CEOs were formerly CFOs. 
B)  CFOs do much more than simply focus on financial documents. 
C)  In recent years, fewer CFOs have been appointed as chief executives officers (CEOs). 
D)  The skill set of CFOs is narrowing because they have to sharpen their focus on financial issues. 
E)  All of these are correct.

Question 2

Describe the services provided by investment banks.

Accepted Answer

Investment banks provide three important

Question 3

What questions must the financial manager ask in order to develop a sound financial plan?

Accepted Answer

There are three basic questions: (1) Wha

Question 4

Aardvark is a small pest-control business that has 30 employees. The company started business within the past year, and needs to make a decision on how best to make sure its finances are managed well as the company continues to grow its customer base and its business. Aardvark needs some short-term financing to meet a cash flow gap while it makes immediate capital expenditures. Which of the following, if true, would strengthen the case for the company using a credit card for this purpose?

Accepted Answer

A)  Family members of the company owners have a lot of liquid assets. 
B)  The company is not sure when it will be able to repay the money. 
C)  The company expects to be able to repay the money next month. 
D)  The company needs to obtain a line of credit without interest. 
E)  The company can provide collateral for a secured loan. 
A)  Family members of the company owners have a lot of liquid assets. 
B)  The company is not sure when it will be able to repay the money. 
C)  The company expects to be able to repay the money next month. 
D)  The company needs to obtain a line of credit without interest. 
E)  The company can provide collateral for a secured loan.

Question 5

What is the difference between factoring accounts receivable and using accounts receivable as collateral for a short-term loan?

Accepted Answer

A)  Factoring is the collateral used when issuing commercial paper. 
B)  There is no difference. 
C)  Factoring involves selling the accounts receivable instead of using them to obtain a loan. 
D)  Factoring accounts receivable is accomplished through a finance company whereas using them as collateral is arranged with a bank. 
E)  Factoring involves agreeing to repurchase accounts receivable at a future date instead of using them as collateral to obtain a loan. 
A)  Factoring is the collateral used when issuing commercial paper. 
B)  There is no difference. 
C)  Factoring involves selling the accounts receivable instead of using them to obtain a loan. 
D)  Factoring accounts receivable is accomplished through a finance company whereas using them as collateral is arranged with a bank. 
E)  Factoring involves agreeing to repurchase accounts receivable at a future date instead of using them as collateral to obtain a loan.

Question 6

Jenex Corp. has a credit policy that reads "2/10, net 30." This means that

Accepted Answer

A)  the company is offering a 10 percent discount if the customer pays within 2 days. 
B)  the company will give a net reduction of 30 percent in the amount owed if the customer pays within 10 days. 
C)  the customer will have to pay at least 10 percent of the bill by the end of 30 days. 
D)  the customer will have to pay at least 30 percent of the bill by the end of 10 days. 
E)  none of these. 
A)  the company is offering a 10 percent discount if the customer pays within 2 days. 
B)  the company will give a net reduction of 30 percent in the amount owed if the customer pays within 10 days. 
C)  the customer will have to pay at least 10 percent of the bill by the end of 30 days. 
D)  the customer will have to pay at least 30 percent of the bill by the end of 10 days. 
E)  none of these.

Question 7

Just like clockwork, Mr. and Mrs. Clark, an elderly retired couple, walk in the bank every year on November 1 to clip coupons from their bonds. What kind of bonds are these?

Accepted Answer

A)  Registered 
B)  Secured 
C)  Callable 
D)  Bearer 
E)  Retirement 
A)  Registered 
B)  Secured 
C)  Callable 
D)  Bearer 
E)  Retirement

Question 8

Suppose that in June 2013 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2013. If the market price of the stock at some point before October 2013 is $23, and you exercise your option, what will happen?

Accepted Answer

A)  You will make a $30.00 profit. 
B)  You will make a $300.00 profit. 
C)  You will make a $3000.00 profit. 
D)  You will incur a loss of $30.00. 
E)  You will incur a loss of $300.00. 
A)  You will make a $30.00 profit. 
B)  You will make a $300.00 profit. 
C)  You will make a $3000.00 profit. 
D)  You will incur a loss of $30.00. 
E)  You will incur a loss of $300.00.

Question 9

When accounts receivables are used as collateral, the process is called factoring accounts receivable.

Accepted Answer

A) True 
 B)False

Question 10

When an investor gets involved in a short sale, what is that investor hoping for in the movement of the price of the stock?

Accepted Answer

A)  A sharp drop 
B)  Maintenance of the current price 
C)  An unchanged and very stable S&P/TSX index 
D)  Appreciation 
E)  A boost upward 
A)  A sharp drop 
B)  Maintenance of the current price 
C)  An unchanged and very stable S&P/TSX index 
D)  Appreciation 
E)  A boost upward

Question 11

Which of the following methods of risk management is a business firm practising when it chooses to terminate its delivery system to avoid the risk of physical damage or injury?

Accepted Answer

A)  Risk shift 
B)  Risk control 
C)  Risk transfer 
D)  Risk avoidance 
E)  Risk retention 
A)  Risk shift 
B)  Risk control 
C)  Risk transfer 
D)  Risk avoidance 
E)  Risk retention

Question 12

Capital expenditures differ from operating expenditures in that

Accepted Answer

A)  they are much smaller. 
B)  they are shorter commitments. 
C)  they are part of working capital. 
D)  they are not budgeted. 
E)  they are not normally sold or converted into cash. 
A)  they are much smaller. 
B)  they are shorter commitments. 
C)  they are part of working capital. 
D)  they are not budgeted. 
E)  they are not normally sold or converted into cash.

Question 13

The market value of a share of stock is influenced by both objective factors like corporate profits and subjective factors like rumours.

Accepted Answer

A) True 
 B)False

Question 14

A futures contract is an agreement to purchase a specified amount of a mutual fund at a given price on a set date in the future.

Accepted Answer

A) True 
 B)False

Question 15

Differentiate between a trade draft and a trade acceptance.

Accepted Answer

A trade draft is a form of trade credit

Question 16

Scott has been informed by his financial manager that his accounts receivable are being paid much too late. To fix this problem, Scott should

Accepted Answer

A)  develop a credit policy. 
B)  call the companies and request the funds. 
C)  charge higher interest rates. 
D)  demand that the money be paid. 
E)  sell the late accounts to collection agents. 
A)  develop a credit policy. 
B)  call the companies and request the funds. 
C)  charge higher interest rates. 
D)  demand that the money be paid. 
E)  sell the late accounts to collection agents.

Question 17

What is a credit policy?

Accepted Answer

A credit policy states the guidelines th

Question 18

The chance of a flood is pure risk.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is correct with regard to market capitalization?

Accepted Answer

A)  There is considerable stability in the market capitalization of companies from year to year. 
B)  Market capitalization is computed by dividing owners' equity by the number of outstanding shares. 
C)  In Canada, most of the companies with the highest market capitalization are financial institutions or resource companies. 
D)  There is general agreement that market capitalization really doesn't tell us very much about the real value of a company. 
E)  All of these are correct. 
A)  There is considerable stability in the market capitalization of companies from year to year. 
B)  Market capitalization is computed by dividing owners' equity by the number of outstanding shares. 
C)  In Canada, most of the companies with the highest market capitalization are financial institutions or resource companies. 
D)  There is general agreement that market capitalization really doesn't tell us very much about the real value of a company. 
E)  All of these are correct.

Question 20

Which of the following requires a commitment fee?

Accepted Answer

A)  Line of credit 
B)  Factoring 
C)  Revolving credit agreement 
D)  Trade acceptance 
E)  Commercial paper 
A)  Line of credit 
B)  Factoring 
C)  Revolving credit agreement 
D)  Trade acceptance 
E)  Commercial paper

Which of the following is correct with respect to chief financial officers (CFOs)?

Describe the services provided by investment banks.

What questions must the financial manager ask in order to develop a sound financial plan?

What is the difference between factoring accounts receivable and using accounts receivable as collateral for a short-term loan?

Jenex Corp. has a credit policy that reads "2/10, net 30." This means that

Just like clockwork, Mr. and Mrs. Clark, an elderly retired couple, walk in the bank every year on November 1 to clip coupons from their bonds. What kind of bonds are these?

Suppose that in June 2013 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2013. If the market price of the stock at some point before October 2013 is $23, and you exercise your option, what will happen?

When accounts receivables are used as collateral, the process is called factoring accounts receivable.

When an investor gets involved in a short sale, what is that investor hoping for in the movement of the price of the stock?

Which of the following methods of risk management is a business firm practising when it chooses to terminate its delivery system to avoid the risk of physical damage or injury?

Capital expenditures differ from operating expenditures in that

The market value of a share of stock is influenced by both objective factors like corporate profits and subjective factors like rumours.

A futures contract is an agreement to purchase a specified amount of a mutual fund at a given price on a set date in the future.

Differentiate between a trade draft and a trade acceptance.

Scott has been informed by his financial manager that his accounts receivable are being paid much too late. To fix this problem, Scott should

What is a credit policy?

The chance of a flood is pure risk.

Which of the following is correct with regard to market capitalization?

Which of the following requires a commitment fee?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Money and Banking

Filters

Exam 15: Finacial Decisions and Risk Management

Which of the following is correct with respect to chief financial officers (CFOs)?

Describe the services provided by investment banks.

What questions must the financial manager ask in order to develop a sound financial plan?

What is the difference between factoring accounts receivable and using accounts receivable as collateral for a short-term loan?

Jenex Corp. has a credit policy that reads "2/10, net 30." This means that

Just like clockwork, Mr. and Mrs. Clark, an elderly retired couple, walk in the bank every year on November 1 to clip coupons from their bonds. What kind of bonds are these?

Suppose that in June 2013 you bought a call option that allows you to buy 100 shares of a certain stock for $20 before October 2013. If the market price of the stock at some point before October 2013 is $23, and you exercise your option, what will happen?

When accounts receivables are used as collateral, the process is called factoring accounts receivable.

When an investor gets involved in a short sale, what is that investor hoping for in the movement of the price of the stock?

Which of the following methods of risk management is a business firm practising when it chooses to terminate its delivery system to avoid the risk of physical damage or injury?

Capital expenditures differ from operating expenditures in that

The market value of a share of stock is influenced by both objective factors like corporate profits and subjective factors like rumours.

A futures contract is an agreement to purchase a specified amount of a mutual fund at a given price on a set date in the future.

Differentiate between a trade draft and a trade acceptance.

Scott has been informed by his financial manager that his accounts receivable are being paid much too late. To fix this problem, Scott should

What is a credit policy?

The chance of a flood is pure risk.

Which of the following is correct with regard to market capitalization?

Which of the following requires a commitment fee?

Understanding the Canadian Business System

The Environment of Business

Conducting Business Ethically and Responsibly

Entrepreneurship, Small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Organizing the Business Enterprise

Managing Human Resources and Labour Relations

Motivating, Satisfying, and Leading Employees

Operations Management, Productivity, and Quality

Understanding Accounting

Understanding Marketing Principles and Developing Products

Pricing, Promotion, and Distributing Products

Money and Banking

Filters