Question 1

The risk associated with the chance of a warehouse fire is a(n) ________ risk.

Accepted Answer

A)  "act of God" 
B)  pure 
C)  speculative 
D)  financial 
E)  market 
A)  "act of God" 
B)  pure 
C)  speculative 
D)  financial 
E)  market

Question 2

What is the difference between registered bonds and bearer bonds?

Accepted Answer

The issuing company mails inte

Question 3

What is an advantage of issuing a bond with a sinking fund provision?

Accepted Answer

A)  This provision offers greater security to an investor because funds to retire the bond issue are set aside each year into the sinking fund. 
B)  The bonds may be converted to a specified number of shares of common stock at the firm's convenience. 
C)  The firm has the right to call in the outstanding bonds at any time and thus sink the bond issue. 
D)  The firm can decide to redeem the fund at any time. 
E)  The firm may retire portions of the bond issue at different predetermined dates. 
A)  This provision offers greater security to an investor because funds to retire the bond issue are set aside each year into the sinking fund. 
B)  The bonds may be converted to a specified number of shares of common stock at the firm's convenience. 
C)  The firm has the right to call in the outstanding bonds at any time and thus sink the bond issue. 
D)  The firm can decide to redeem the fund at any time. 
E)  The firm may retire portions of the bond issue at different predetermined dates.

Question 4

What are the main methods of debt financing? What is the major source of debt financing for most corporations?

Accepted Answer

The two main methods are long-term loans

Question 5

A(n) ________ is an order to a stock broker to buy or sell a security at the prevailing price at the time the order is placed.

Accepted Answer

A)  stop order 
B)  limit order 
C)  odd lot order 
D)  market order 
E)  round lot order 
A)  stop order 
B)  limit order 
C)  odd lot order 
D)  market order 
E)  round lot order

Question 6

Which of the following terms would a firm use to speed up cash flow?

Accepted Answer

A)  1/10; net 60 
B)  1/10; net 30 
C)  3/10; net 30 
D)  2/10; net 60 
E)  2/10; net 30 
A)  1/10; net 60 
B)  1/10; net 30 
C)  3/10; net 30 
D)  2/10; net 60 
E)  2/10; net 30

Question 7

Which term is used to identify the granting of credit by one firm to another?

Accepted Answer

A)  A line of credit 
B)  A commitment fee 
C)  Trade credit 
D)  A secured loan 
E)  An interfirm understanding of commercial intent 
A)  A line of credit 
B)  A commitment fee 
C)  Trade credit 
D)  A secured loan 
E)  An interfirm understanding of commercial intent

Question 8

How can a lender gain some sort of assurance that the borrower of funds will repay the debt?

Accepted Answer

The most basic way is to make

Question 9

Issuers of bonds are most likely to call them in when

Accepted Answer

A)  the prevailing rate of interest exceeds that stipulated on the bonds. 
B)  when investor confidence goes down. 
C)  the prevailing rate of interest is less than that stipulated on the bonds. 
D)  when investor confidence goes up. 
E)  when the government revises its capital gains tax law. 
A)  the prevailing rate of interest exceeds that stipulated on the bonds. 
B)  when investor confidence goes down. 
C)  the prevailing rate of interest is less than that stipulated on the bonds. 
D)  when investor confidence goes up. 
E)  when the government revises its capital gains tax law.

Question 10

Generally speaking, debt financing is wiser from a financial perspective than equity financing.

Accepted Answer

A) True 
 B)False

Question 11

The most common form of trade credit is

Accepted Answer

A)  the trade acceptance. 
B)  the trade draft. 
C)  the promissory note. 
D)  open-book credit. 
E)  none of these. 
A)  the trade acceptance. 
B)  the trade draft. 
C)  the promissory note. 
D)  open-book credit. 
E)  none of these.

Question 12

Inventory can only rarely be used as collateral.

Accepted Answer

A) True 
 B)False

Question 13

How do commodity markets work? What are the risks involved when investing in the commodities market? What are the rewards or potential rewards?

Accepted Answer

- Commodities markets sell futures contr

Question 14

How do convertible bonds work?

Accepted Answer

Convertible bonds can be converted into

Question 15

What do credit terms of 2/10; net 30 refer to?

Accepted Answer

The selling company is offerin

Question 16

A firm wants to use its benefit package to appeal to applicants. One part of the benefits package is the opportunity to contribute to a retirement savings program. The recent instability of the stock market has made this less attractive. Which of the following, if true, might make the option more appealing to a prospect?

Accepted Answer

A)  In recent months, the stock market has become more bullish, making mutual funds a better bet. 
B)  The firm pays the maintenance fees for the investments. 
C)  Employees may choose the amount set aside each month, up to 10 percent of gross income, which is untaxed until the money is removed from the fund. 
D)  Over a 10-year period, the mutual funds included in the firm's option have accrued at a rate equal to the consumer price index. 
E)  The firm allows employees to select from and move funds around to a wide range of mutual fund options, some more conservative than others. 
A)  In recent months, the stock market has become more bullish, making mutual funds a better bet. 
B)  The firm pays the maintenance fees for the investments. 
C)  Employees may choose the amount set aside each month, up to 10 percent of gross income, which is untaxed until the money is removed from the fund. 
D)  Over a 10-year period, the mutual funds included in the firm's option have accrued at a rate equal to the consumer price index. 
E)  The firm allows employees to select from and move funds around to a wide range of mutual fund options, some more conservative than others.

Question 17

Which of the following represents the overall objective of financial managers?

Accepted Answer

A)  To ensure that the company has enough funds on hand to purchase materials needed to produce goods and services 
B)  To ensure that the company has enough money to pay for its debts 
C)  To increase the supply of money for the economy 
D)  To increase the value of the firm and thus to increase shareholder wealth 
E)  To manage the firm's cash flow 
A)  To ensure that the company has enough funds on hand to purchase materials needed to produce goods and services 
B)  To ensure that the company has enough money to pay for its debts 
C)  To increase the supply of money for the economy 
D)  To increase the value of the firm and thus to increase shareholder wealth 
E)  To manage the firm's cash flow

Question 18

How do fantasy stock markets work?

Accepted Answer

Participants start with an initial sum i

Question 19

Laura is analyzing several investment possibilities. She thinks that some options have better chances of good paybacks but those paybacks are smaller. She is exploring the

Accepted Answer

A)  cash flow trade-off. 
B)  cash flow decision. 
C)  risk-return relationship. 
D)  safety factor. 
E)  risky principle. 
A)  cash flow trade-off. 
B)  cash flow decision. 
C)  risk-return relationship. 
D)  safety factor. 
E)  risky principle.

Question 20

How do long-term expenditures differ from short-term expenditures?

Accepted Answer

Compared to short-term expenditures, lon

The risk associated with the chance of a warehouse fire is a(n) ________ risk.

What is the difference between registered bonds and bearer bonds?

What is an advantage of issuing a bond with a sinking fund provision?

What are the main methods of debt financing? What is the major source of debt financing for most corporations?

A(n) ________ is an order to a stock broker to buy or sell a security at the prevailing price at the time the order is placed.

Which of the following terms would a firm use to speed up cash flow?

Which term is used to identify the granting of credit by one firm to another?

How can a lender gain some sort of assurance that the borrower of funds will repay the debt?

Issuers of bonds are most likely to call them in when

Generally speaking, debt financing is wiser from a financial perspective than equity financing.

The most common form of trade credit is

Inventory can only rarely be used as collateral.

How do commodity markets work? What are the risks involved when investing in the commodities market? What are the rewards or potential rewards?

How do convertible bonds work?

What do credit terms of 2/10; net 30 refer to?

Which of the following represents the overall objective of financial managers?

How do fantasy stock markets work?

Laura is analyzing several investment possibilities. She thinks that some options have better chances of good paybacks but those paybacks are smaller. She is exploring the

How do long-term expenditures differ from short-term expenditures?

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

The risk associated with the chance of a warehouse fire is a(n) ________ risk.

What is the difference between registered bonds and bearer bonds?

What is an advantage of issuing a bond with a sinking fund provision?

What are the main methods of debt financing? What is the major source of debt financing for most corporations?

A(n) ________ is an order to a stock broker to buy or sell a security at the prevailing price at the time the order is placed.

Which of the following terms would a firm use to speed up cash flow?

Which term is used to identify the granting of credit by one firm to another?

How can a lender gain some sort of assurance that the borrower of funds will repay the debt?

Issuers of bonds are most likely to call them in when

Generally speaking, debt financing is wiser from a financial perspective than equity financing.

The most common form of trade credit is

Inventory can only rarely be used as collateral.

How do commodity markets work? What are the risks involved when investing in the commodities market? What are the rewards or potential rewards?

How do convertible bonds work?

What do credit terms of 2/10; net 30 refer to?

Which of the following represents the overall objective of financial managers?

How do fantasy stock markets work?

Laura is analyzing several investment possibilities. She thinks that some options have better chances of good paybacks but those paybacks are smaller. She is exploring the

How do long-term expenditures differ from short-term expenditures?

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