Exam 15: Finacial Decisions and Risk Management

Which one of the following risk management techniques does a firm practise when it chooses self-insurance instead of submitting claims to an insurance company?

In 2012, Canadian Pacific Railway Ltd. announced that it would invest $1.2 billion in order to improve its operating ratio. This is an example of a financial plan.

Differentiate between pure and speculative risk.

Which of the following is true with regard to preferred stock?

Jack is setting up a global operation. The form of trade credit that is particularly useful for Jack's international transactions would be

Rosella is financial manager who is comparing the effects of debt and equity financing. She finds that

Start-up firms without proven financial success usually aren't required to present a business plan, as long as the owner has considerable financial assets.

The two primary sources of long-term debt funds are

What is the difference between a line of credit and a revolving credit agreement?

Cut out but not-yet-sewn jeans are part of the ________ inventory at a clothing manufacturer.

Molly has been very aggressive in her investment strategy and is currently invested in lower-quality common stocks. What type of investment would you recommend to Molly if she says she wants to move down one notch in risk?

Primary securities markets are those that handle the most important stock and bond issues, while secondary markets are those which handle the less important issues.

What are futures contracts? Explain how they work by giving an example.

A company that pledges accounts receivable is probably in financial difficulty.

The first step in the risk management process is to measure the frequency and severity of losses and their impact.

Parker Corp. has decided to pay employee medical costs out of company funds rather than buying insurance. This is an example of

List and briefly describe the different types of orders that investors can place when deciding to buy or sell a security.

Equity financing via common stock can be more expensive than issuing bonds because

Since equity funding is expensive, why don't businesses rely totally on debt capital?

Equity financing involves obtaining long-term funding from within the business firm.