Exam 15: Finacial Decisions and Risk Management

Corporation B had sales revenue last year of $20 million, operating expenses of $16 million, and net profit of $4 million. There are 2 million shares of stock oustanding. What is the par value of the company's stock?

What are the four responsibilities of finance (corporate finance)?

Describe the differences between primary and secondary securities markets.

If riot police officers are trained to handle violent soccer fans, this is an example of the ________ strategy for risk management.

Omar Ansari, a relatively conservative investor, received a prospectus from his stockbroker providing details about XYXY Biotech Company and its planned IPO. XYXY was developing a new and promising type of anti-cancer drug. After studying the prospectus, Omar decided not to invest in the IPO. Which one of the following items of information in the prospectus was most likely not a factor in Omar's decision?

If the price of Microsoft's shares are $30.00 and there are 3 million shares outstanding, then Microsoft's market capitalization would be $9 million.

The second step in a risk management program is to

For a specific firm, which of the following is most likely to carry the lowest interest rate?

Identify, briefly describe, and give one example for each of the two types of long-term financing.

Len is working with a discount broker. Which service would he be least likely to receive?

Sallyanne is selling merchandise to a retailer using the terms of a trade draft. As a new employee of Sallyanne's, you find out that a trade draft is

Munschausen is a German-based appliance company that is preparing to begin international operations, wherein it plans to open several production facilities and sales centres abroad. The company needs a substantial amount of capital to start its international operations and needs to decide whether it should pursue debt financing by acquiring loans, or whether it can get equity financing from investors. Which of the following, if true, would strengthen the case for Munschausen's seeking to acquire capital by equity financing?

What are the two variables that are used to determine where a specific financial instrument will be placed on the risk-return continuum?

Financial managers deal only with speculative risks.

What is a call option?

Dennis can compute the market capitalization of the company he works for by

What is a financial manager?

A financial manager's overall objective is to increase the value of the firm and thus to increase shareholders' wealth.

An exchange-traded fund (ETF) is a bundle of stocks (or bonds) that are in an index that tracks the overall movement of a market.

In a secondary securities market, new stocks and bonds are bought and sold by firms and governments.