Question 1

Which of the following statements is TRUE of a company's inventory?

Accepted Answer

A)  It is an example of a long-term asset that companies hold. 
B)  It is the most liquid current asset of a company. 
C)  It has the potential to be converted to cash. 
D)  It is classified under accounts receivable. 
E)  It is not associated with costs when it is waiting to be sold. 
A)  It is an example of a long-term asset that companies hold. 
B)  It is the most liquid current asset of a company. 
C)  It has the potential to be converted to cash. 
D)  It is classified under accounts receivable. 
E)  It is not associated with costs when it is waiting to be sold. C

Question 2

Secured loans are backed up with assets that the lender can claim in case of default.

Accepted Answer

A) True 
 B)False  True

Question 3

Gordon Glass is a large manufacturer of glass products.The company's product range includes glass vessels,car glasses,mirrors and so forth.In order to raise money to open a new plant in Alaska,the company issues corporate bonds.The bonds are unsecured,but include the corporation's promise to pay an interest of 12 percent.The tenure of the bond is five years and neither party can change the maturity date.These bonds are examples of ________.

Accepted Answer

A)  redeemable bonds 
B)  callable bonds 
C)  debentures 
D)  mortgaged bonds 
E)  collateralized bonds 
A)  redeemable bonds 
B)  callable bonds 
C)  debentures 
D)  mortgaged bonds 
E)  collateralized bonds C

Question 4

Compare and contrast secured bonds and debentures.

Accepted Answer

Secured bonds,like secured loans,are bac

Question 5

A company decides to remain highly leveraged to minimize the ownership shares.Critically analyze this approach.

Accepted Answer

Companies that are highly leveraged (tha

Question 6

Which of the following sources of short-term debt is characterized by revolving credit terms?

Accepted Answer

A)  unsecured loan 
B)  secured loan 
C)  trade credit 
D)  credit card 
E)  commercial paper 
A)  unsecured loan 
B)  secured loan 
C)  trade credit 
D)  credit card 
E)  commercial paper

Question 7

Which of the following is a major advantage of raising funds through selling shares of ownership?

Accepted Answer

A)  Selling shares to the public makes the company's operations less complicated. 
B)  It does not change the way a company is managed. 
C)  It consumes less time than other forms of financing. 
D)  It has tremendous potential to fuel organizational growth. 
E)  Owners do not risk their position in the firm when selling shares. 
A)  Selling shares to the public makes the company's operations less complicated. 
B)  It does not change the way a company is managed. 
C)  It consumes less time than other forms of financing. 
D)  It has tremendous potential to fuel organizational growth. 
E)  Owners do not risk their position in the firm when selling shares.

Question 8

Incobar Steel is a large manufacturer of steel.The company decides to issue bonds to raise money to expand its operations.The final maturity term of the bonds is three years,but a portion of the outstanding bonds matures once in every six months.The bonds are backed only by the corporation's promise to pay.The bonds that Incobar Steel is issuing are best referred to as ________ bonds.

Accepted Answer

A)  mortgage 
B)  callable 
C)  term 
D)  secured 
E)  serial 
A)  mortgage 
B)  callable 
C)  term 
D)  secured 
E)  serial

Question 9

A company sells its accounts receivable to an intermediary.The intermediary collects the receivables from the customer.This is an example of ________.

Accepted Answer

A)  an unsecured loan 
B)  factoring 
C)  trade credit 
D)  a secured loan 
E)  a commercial paper 
A)  an unsecured loan 
B)  factoring 
C)  trade credit 
D)  a secured loan 
E)  a commercial paper

Question 10

Which of the following is a valid observation of venture capital?

Accepted Answer

A)  Venture capital counts on getting very high returns from a few winners. 
B)  Venture capital is a specialized form of public equity. 
C)  Venture capital is the most common type of funding in the United States. 
D)  Venture capital is one of the least specialized forms of funding. 
E)  Venture capital is one of the most widely available forms of funding. 
A)  Venture capital counts on getting very high returns from a few winners. 
B)  Venture capital is a specialized form of public equity. 
C)  Venture capital is the most common type of funding in the United States. 
D)  Venture capital is one of the least specialized forms of funding. 
E)  Venture capital is one of the most widely available forms of funding.

Question 11

USS Agro is a firm that markets agricultural products.The firm procures supplies from agricultural cooperatives across the world.The firm forms agreements with the cooperatives to provide supplies at a fixed price in the future to protect them against changing prices.This is an example of ________.

Accepted Answer

A)  zero-based budgeting 
B)  inventorying 
C)  liquidation 
D)  hedging 
E)  standardization 
A)  zero-based budgeting 
B)  inventorying 
C)  liquidation 
D)  hedging 
E)  standardization

Question 12

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Accepted Answer

A) True 
 B)False

Question 13

Venture capital is one of the least specialized and most widely available forms of funding.

Accepted Answer

A) True 
 B)False

Question 14

An underwriter is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Accepted Answer

A) True 
 B)False

Question 15

Explain why companies form hedging agreements with their suppliers.

Accepted Answer

Companies protect themselves against fut

Question 16

Before a company can sell shares to the public in the United States,it must ________.

Accepted Answer

A)  generate a profit of $1 billion 
B)  have a turnover of $1 billion 
C)  register with the SEC 
D)  have fifty or more shareholders 
E)  have a hundred or more shareholders 
A)  generate a profit of $1 billion 
B)  have a turnover of $1 billion 
C)  register with the SEC 
D)  have fifty or more shareholders 
E)  have a hundred or more shareholders

Question 17

Financial decisions with high perceived risk will have low potential for rewards.

Accepted Answer

A) True 
 B)False

Question 18

Preparing a public offering involves ________.

Accepted Answer

A)  issuing corporate bonds to the employees of the firm 
B)  hiring a public accounting firm to serve as auditor 
C)  hiring a private company as a proxy firm 
D)  raising $1 million as a security deposit to the SEC 
E)  engaging in collective bargaining with the employees 
A)  issuing corporate bonds to the employees of the firm 
B)  hiring a public accounting firm to serve as auditor 
C)  hiring a private company as a proxy firm 
D)  raising $1 million as a security deposit to the SEC 
E)  engaging in collective bargaining with the employees

Question 19

Compare and contrast credit cards and trade credit.

Accepted Answer

Credit cards are one of the most expensi

Question 20

The ________ outlines expenditures for real estate,new facilities,major equipment,and other such investments.

Accepted Answer

A)  operating budget 
B)  project budget 
C)  master budget 
D)  capital budget 
E)  start-up budget 
A)  operating budget 
B)  project budget 
C)  master budget 
D)  capital budget 
E)  start-up budget

Which of the following statements is TRUE of a company's inventory?

Secured loans are backed up with assets that the lender can claim in case of default.

Compare and contrast secured bonds and debentures.

A company decides to remain highly leveraged to minimize the ownership shares.Critically analyze this approach.

Which of the following sources of short-term debt is characterized by revolving credit terms?

Which of the following is a major advantage of raising funds through selling shares of ownership?

A company sells its accounts receivable to an intermediary.The intermediary collects the receivables from the customer.This is an example of ________.

Which of the following is a valid observation of venture capital?

USS Agro is a firm that markets agricultural products.The firm procures supplies from agricultural cooperatives across the world.The firm forms agreements with the cooperatives to provide supplies at a fixed price in the future to protect them against changing prices.This is an example of ________.

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Venture capital is one of the least specialized and most widely available forms of funding.

An underwriter is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Explain why companies form hedging agreements with their suppliers.

Before a company can sell shares to the public in the United States,it must ________.

Financial decisions with high perceived risk will have low potential for rewards.

Preparing a public offering involves ________.

Compare and contrast credit cards and trade credit.

The ________ outlines expenditures for real estate,new facilities,major equipment,and other such investments.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters

Exam 18: Financial Management

Which of the following statements is TRUE of a company's inventory?

Secured loans are backed up with assets that the lender can claim in case of default.

Compare and contrast secured bonds and debentures.

A company decides to remain highly leveraged to minimize the ownership shares.Critically analyze this approach.

Which of the following sources of short-term debt is characterized by revolving credit terms?

Which of the following is a major advantage of raising funds through selling shares of ownership?

A company sells its accounts receivable to an intermediary.The intermediary collects the receivables from the customer.This is an example of ________.

Which of the following is a valid observation of venture capital?

USS Agro is a firm that markets agricultural products.The firm procures supplies from agricultural cooperatives across the world.The firm forms agreements with the cooperatives to provide supplies at a fixed price in the future to protect them against changing prices.This is an example of ________.

Leverage is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

Venture capital is one of the least specialized and most widely available forms of funding.

An underwriter is a specialized type of bank that buys the shares from the company preparing an IPO and sells them to investors.

Explain why companies form hedging agreements with their suppliers.

Before a company can sell shares to the public in the United States,it must ________.

Financial decisions with high perceived risk will have low potential for rewards.

Preparing a public offering involves ________.

Compare and contrast credit cards and trade credit.

The ________ outlines expenditures for real estate,new facilities,major equipment,and other such investments.

Developing a Business Mindset

Understanding Basic Economics

The Global Marketplace

Business Ethics and Corporate Social Responsibility

Forms of Ownership

Entrepreneurship and Small Business Ownership

Management Roles, Functions, and Skills

Organization and Teamwork

Production Systems

Employee Motivation

Human Resources Management

Labor Relations

The Art and Science of Marketing

Product and Pricing Strategies

Distribution and Marketing Logistics

Customer Communication

Financial Information and Accounting Concepts

Financial Markets and Investment Strategies

The Money Supply and Banking Systems

Filters