Exam 15: Finacial Decisions and Risk Management

Mega Computer's financial statements show 1000 shares of common stock with a par value of $10 000, retained earnings of $20 000, additional paid in capital of $10 000, and long-term debt of $30 000. What is the market value of a share of Mega's stock?

Don Dillon is a 24-year-old graphic designer. He eventually wants to get married, raise a family, and buy a house. He knows that he has to start putting money away so that his goals can someday become a reality. He has heard that investing is risky because you can lose money as well as make money. So Don decides to play it safe and deposit money in a bank on a regular basis. Why might this not be his best strategy?

Why has online trading become so popular?

Which term is used to identify a bank's requirement for the borrower to give the bank the right to seize certain assets if payments are not made as promised?

Explain how various financial instruments (government bonds, common stock, etc.) relate to each other in terms of risk and return.

Blue-sky laws apply mainly to the

John is a factor who has just bought $40 000 worth of finished goods for $24 000. The profit that he will make on this transaction depends on

When an investment bank engages in underwriting, that investment bank is taking on risk in the process of launching new securities.

Before a corporation sells securities, that corporation is required by law to offer future investors the opportunity to read through a document which contains complete information on both the new issue and the corporation. What is that document called?

The bond indenture spells out all of the details relating to the bond except for the interest rate that will be paid.

All of the following are responsibilities of the financial manager except

Briefly explain the three responsibilities of a financial manager.

Which of the following is correct?

A credit policy of "2/10, net 30" means

What is a promissory note?

The terms "pledging accounts receivable" and "factoring accounts receivable" are essentially synonymous.

One difference between mutual funds and exchange traded funds is that the latter are priced continuously, not just at the end of the trading day.

What is the financial manager's overall objective?

When a firm ensures that it always has enough funds on hand to purchase the materials and human resources that it needs to produce goods and services, it is exercising

Open-book credit is a secured short-term loan that requires that the borrower put up collateral.