Question 1

Zero balance accounts permit centralized control over cash outflows while maintaining divisional disbursing authority.

Accepted Answer

A) True 
 B)False  True

Question 2

A retailer sells most of its merchandise on credit and bills clients monthly.Which of the following elements of float does the retailer have the most control over?

Accepted Answer

A)  mail float 
B)  processing float 
C)  transit float 
D)  disbursing float 
A)  mail float 
B)  processing float 
C)  transit float 
D)  disbursing float B

Question 3

Which of the following is generally under the control of the financial manager?

Accepted Answer

A)  the percentage of credit sales to total sales 
B)  the actual level of sales 
C)  the credit policies 
D)  A and B 
A)  the percentage of credit sales to total sales 
B)  the actual level of sales 
C)  the credit policies 
D)  A and B C

Question 4

Which of the following would be an example of the "precautionary motive" for a firm holding cash balances?

Accepted Answer

A)  purchase of inventory 
B)  anticipating a strike 
C)  purchase fixed assets 
D)  make dividend payments 
A)  purchase of inventory 
B)  anticipating a strike 
C)  purchase fixed assets 
D)  make dividend payments

Question 5

When a corporation designs an investment strategy for investing temporary excess cash balances in marketable securities,it must consider a variety of factors.Which of the following is the most important?

Accepted Answer

A)  maintaining the safety of principal 
B)  maintaining the greatest float 
C)  achieving the highest yield 
D)  illiquidity 
A)  maintaining the safety of principal 
B)  maintaining the greatest float 
C)  achieving the highest yield 
D)  illiquidity

Question 6

A company concerned about the liquidity of its near-cash securities should invest in U.S.Treasury bills because the secondary market for U.S.Treasury bills is excellent.

Accepted Answer

A) True 
 B)False

Question 7

A company with national sales but only one large manufacturing operation and one administrative headquarters located in the same large northeastern city would most likely use which of the following techniques for cash management?

Accepted Answer

A)  lockbox system 
B)  zero balance accounts 
C)  payable-through drafts 
D)  bankers' acceptances 
A)  lockbox system 
B)  zero balance accounts 
C)  payable-through drafts 
D)  bankers' acceptances

Question 8

Which of the following might occur when a firm increases its collection efforts:

Accepted Answer

A)  an increase in inventory costs. 
B)  an increase in bad debts. 
C)  an increase in sales. 
D)  a decline in accounts payable. 
A)  an increase in inventory costs. 
B)  an increase in bad debts. 
C)  an increase in sales. 
D)  a decline in accounts payable.

Question 9

Funds that are available in a company's bank account until its payment check has cleared refers to

Accepted Answer

A)  mail float. 
B)  processing float. 
C)  transit float. 
D)  disbursing float. 
A)  mail float. 
B)  processing float. 
C)  transit float. 
D)  disbursing float.

Question 10

Near-cash assets consist of marketable securities and accounts receivable.

Accepted Answer

A) True 
 B)False

Question 11

The terms of sale identify the possible discount for early payment,the discount period,and the total credit period.

Accepted Answer

A) True 
 B)False

Question 12

U.S.Treasury Bills,bankers' acceptances and commercial paper are all sold on a discount basis.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following would be an example of the "transactions motive" for a firm holding cash balances?

Accepted Answer

A)  investing "excess cash balances" 
B)  anticipating a downturn in the economy 
C)  purchase of inventory 
D)  take advantage of an anticipated decline in the price of raw materials 
A)  investing "excess cash balances" 
B)  anticipating a downturn in the economy 
C)  purchase of inventory 
D)  take advantage of an anticipated decline in the price of raw materials

Question 14

Non-uniform demand can be accommodated in the EOQ model by allowing for non-uniform ordering costs.

Accepted Answer

A) True 
 B)False

Question 15

Commercial paper is a short-term,unsecured,promissory note.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following are short-term,unsecured promissory notes sold by large businesses?

Accepted Answer

A)  negotiable certificates of deposit 
B)  repurchase agreements 
C)  money market mutual funds 
D)  commercial paper 
A)  negotiable certificates of deposit 
B)  repurchase agreements 
C)  money market mutual funds 
D)  commercial paper

Question 17

A way of managing a firm's cash disbursements would be through

Accepted Answer

A)  zero balance accounts. 
B)  accounts receivable factoring. 
C)  lockbox system. 
D)  floating lien. 
A)  zero balance accounts. 
B)  accounts receivable factoring. 
C)  lockbox system. 
D)  floating lien.

Question 18

One of the attractive features of commercial paper is an active secondary market.

Accepted Answer

A) True 
 B)False

Question 19

Determine the effective annualized cost of forgoing the trade discount on terms 2/15 net 65.

Accepted Answer

A)  11.30% 
B)  14.69% 
C)  32.6% 
D)  48.98% 
A)  11.30% 
B)  14.69% 
C)  32.6% 
D)  48.98%

Question 20

Accounts receivable variables under control of the financial manager include the terms of credit sales and the quality of credit customers.

Accepted Answer

A) True 
 B)False

Zero balance accounts permit centralized control over cash outflows while maintaining divisional disbursing authority.

A retailer sells most of its merchandise on credit and bills clients monthly.Which of the following elements of float does the retailer have the most control over?

Which of the following is generally under the control of the financial manager?

Which of the following would be an example of the "precautionary motive" for a firm holding cash balances?

When a corporation designs an investment strategy for investing temporary excess cash balances in marketable securities,it must consider a variety of factors.Which of the following is the most important?

A company concerned about the liquidity of its near-cash securities should invest in U.S.Treasury bills because the secondary market for U.S.Treasury bills is excellent.

A company with national sales but only one large manufacturing operation and one administrative headquarters located in the same large northeastern city would most likely use which of the following techniques for cash management?

Which of the following might occur when a firm increases its collection efforts:

Funds that are available in a company's bank account until its payment check has cleared refers to

Near-cash assets consist of marketable securities and accounts receivable.

The terms of sale identify the possible discount for early payment,the discount period,and the total credit period.

U.S.Treasury Bills,bankers' acceptances and commercial paper are all sold on a discount basis.

Which of the following would be an example of the "transactions motive" for a firm holding cash balances?

Non-uniform demand can be accommodated in the EOQ model by allowing for non-uniform ordering costs.

Commercial paper is a short-term,unsecured,promissory note.

Which of the following are short-term,unsecured promissory notes sold by large businesses?

A way of managing a firm's cash disbursements would be through

One of the attractive features of commercial paper is an active secondary market.

Determine the effective annualized cost of forgoing the trade discount on terms 2/15 net 65.

Accounts receivable variables under control of the financial manager include the terms of credit sales and the quality of credit customers.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Filters

Exam 16: Current Asset Management

Zero balance accounts permit centralized control over cash outflows while maintaining divisional disbursing authority.

A retailer sells most of its merchandise on credit and bills clients monthly.Which of the following elements of float does the retailer have the most control over?

Which of the following is generally under the control of the financial manager?

Which of the following would be an example of the "precautionary motive" for a firm holding cash balances?

When a corporation designs an investment strategy for investing temporary excess cash balances in marketable securities,it must consider a variety of factors.Which of the following is the most important?

A company concerned about the liquidity of its near-cash securities should invest in U.S.Treasury bills because the secondary market for U.S.Treasury bills is excellent.

A company with national sales but only one large manufacturing operation and one administrative headquarters located in the same large northeastern city would most likely use which of the following techniques for cash management?

Which of the following might occur when a firm increases its collection efforts:

Funds that are available in a company's bank account until its payment check has cleared refers to

Near-cash assets consist of marketable securities and accounts receivable.

The terms of sale identify the possible discount for early payment,the discount period,and the total credit period.

U.S.Treasury Bills,bankers' acceptances and commercial paper are all sold on a discount basis.

Which of the following would be an example of the "transactions motive" for a firm holding cash balances?

Non-uniform demand can be accommodated in the EOQ model by allowing for non-uniform ordering costs.

Commercial paper is a short-term,unsecured,promissory note.

Which of the following are short-term,unsecured promissory notes sold by large businesses?

A way of managing a firm's cash disbursements would be through

One of the attractive features of commercial paper is an active secondary market.

Determine the effective annualized cost of forgoing the trade discount on terms 2/15 net 65.

Accounts receivable variables under control of the financial manager include the terms of credit sales and the quality of credit customers.

An Introduction to the Foundations of Financial Management

The Financial Markets and Interest Rates

Understanding Financial Statements and Cash Flows

Evaluating a Firms Financial Performance

The Time Value of Money

The Meaning and Measurement of Risk and Return

The Valuation and Characteristics of Bonds

The Valuation and Characteristics of Stock

The Cost of Capital

Capital-Budgeting Techniques and Practice

Cash Flows and Other Topics in Capital Budgeting

Determining the Financing Mix

Dividend Policy and Internal Financing

Short-Term Financial Planning

Working-Capital Management

International Business Finance

Filters