Question 1

Jeremy has recently received merchandise along with invoices stating credit terms.Jeremy has most likely been given a(n)

Accepted Answer

A)  trade acceptance. 
B)  line of credit. 
C)  revolving credit agreement. 
D)  promissory note. 
E)  open-book credit. 
A)  trade acceptance. 
B)  line of credit. 
C)  revolving credit agreement. 
D)  promissory note. 
E)  open-book credit.

Question 2

Liability means responsibility for damages in case of accidental or deliberate harm to individuals or property.

Accepted Answer

A) True 
 B)False

Question 3

Secured,short-term loans are usually secured by

Accepted Answer

A)  deposits with the bank. 
B)  fixed assets. 
C)  inventories. 
D)  commercial paper. 
E)  trade credit. 
A)  deposits with the bank. 
B)  fixed assets. 
C)  inventories. 
D)  commercial paper. 
E)  trade credit.

Question 4

Open-book credit is available only to companies that are financially strong.

Accepted Answer

A) True 
 B)False

Question 5

What type of risk involves only the possibility of a loss?

Accepted Answer

A)  optimal risk 
B)  pure risk 
C)  risk transfer 
D)  insurable risk 
E)  speculative risk 
A)  optimal risk 
B)  pure risk 
C)  risk transfer 
D)  insurable risk 
E)  speculative risk

Question 6

Mary's company has decided to terminate its delivery system to avoid the risk of physical damage or injury.It is practising

Accepted Answer

A)  risk elevation. 
B)  risk control. 
C)  risk transfer. 
D)  risk avoidance. 
E)  risk retention. 
A)  risk elevation. 
B)  risk control. 
C)  risk transfer. 
D)  risk avoidance. 
E)  risk retention.

Question 7

As a result of financial scandals during the last few years,fewer finance managers are being appointed as CEOs of companies.

Accepted Answer

A) True 
 B)False

Question 8

What is a promissory note?

Accepted Answer

A)  A "gentleman's agreement" to pay for products that were shipped on faith that the payment would be forthcoming. 
B)  A short-term loan which uses accounts receivable as collateral for a loan. 
C)  An agreement signed by the buyer stating when and how much money will be paid to the seller in return for immediate credit. 
D)  The requirement for a firm to maintain a certain amount of funds on deposit with the lending bank. 
E)  The right given to a bank to seize certain assets if payment is not made when due. 
A)  A "gentleman's agreement" to pay for products that were shipped on faith that the payment would be forthcoming. 
B)  A short-term loan which uses accounts receivable as collateral for a loan. 
C)  An agreement signed by the buyer stating when and how much money will be paid to the seller in return for immediate credit. 
D)  The requirement for a firm to maintain a certain amount of funds on deposit with the lending bank. 
E)  The right given to a bank to seize certain assets if payment is not made when due.

Question 9

A promissory note states when payment will be made and how much money will be paid to the seller in return for immediate credit.

Accepted Answer

A) True 
 B)False

Question 10

Of the two basic types of long-term financing (debt and equity),debt is usually the best.

Accepted Answer

A) True 
 B)False

Question 11

Risk control is

Accepted Answer

A)  the practice of minimizing the frequency or severity of losses from risky activities. 
B)  the practice of avoiding risk by declining or ceasing to participate in an activity. 
C)  the assumption of financial consequences of loss by the firm. 
D)  the shifting of the risk to an insurance company. 
E)  the practice of evaluating all costs associated with a decision. 
A)  the practice of minimizing the frequency or severity of losses from risky activities. 
B)  the practice of avoiding risk by declining or ceasing to participate in an activity. 
C)  the assumption of financial consequences of loss by the firm. 
D)  the shifting of the risk to an insurance company. 
E)  the practice of evaluating all costs associated with a decision.

Question 12

Mega Computers has just shipped one of its products to Compucell on faith that they will pay the invoice.This is a(n)

Accepted Answer

A)  trade acceptance. 
B)  revolving credit agreement. 
C)  line of credit. 
D)  open-book credit. 
E)  promissory note. 
A)  trade acceptance. 
B)  revolving credit agreement. 
C)  line of credit. 
D)  open-book credit. 
E)  promissory note.

Question 13

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

Accepted Answer

A)  Loan secured by fixed assets 
B)  Commercial paper 
C)  Loan secured by finished goods 
D)  Unsecured loan 
E)  Loan secured by raw materials 
A)  Loan secured by fixed assets 
B)  Commercial paper 
C)  Loan secured by finished goods 
D)  Unsecured loan 
E)  Loan secured by raw materials

Question 14

An insurable risk must satisfy all of the following criteria except

Accepted Answer

A)  predictability. 
B)  verifiability. 
C)  unconnectedness. 
D)  casualty. 
E)  quantifiability. 
A)  predictability. 
B)  verifiability. 
C)  unconnectedness. 
D)  casualty. 
E)  quantifiability.

Question 15

The risk associated with designing and distributing a new product is a(n)________ risk.

Accepted Answer

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

Question 16

Corporation A has a capital structure of 40 percent equity and 60 percent debt,while Corporation B has a capital structure of 70 percent equity and 30 percent debt.Corporation A has the most conservative capital structure.

Accepted Answer

A) True 
 B)False

Question 17

Debt financing appeals most strongly to companies that have predictable profits and cash-flow patterns.

Accepted Answer

A) True 
 B)False

Question 18

Adrianna decided to purchase preferred shares because

Accepted Answer

A)  common shareholders get paid first at a lower rate of return and preferred shareholders get paid next at a much higher rate of return. 
B)  it has some of the features of corporate bonds and some features of common stock. 
C)  preferred shares allow shareholders to choose whether they wish to receive cash dividends or more shares. 
D)  preferred shares mature very quickly. 
E)  she likes the variable interest rate paid by preferred shares. 
A)  common shareholders get paid first at a lower rate of return and preferred shareholders get paid next at a much higher rate of return. 
B)  it has some of the features of corporate bonds and some features of common stock. 
C)  preferred shares allow shareholders to choose whether they wish to receive cash dividends or more shares. 
D)  preferred shares mature very quickly. 
E)  she likes the variable interest rate paid by preferred shares.

Question 19

The Gap has t-shirts boxed and ready to ship to retailers.These goods make up part of the ________ inventory.

Accepted Answer

A)  accounts receivable 
B)  sales 
C)  sales-in-process 
D)  credit 
E)  finished goods 
A)  accounts receivable 
B)  sales 
C)  sales-in-process 
D)  credit 
E)  finished goods

Question 20

A firm that buys an insurance policy to protect itself against automobile accidents is practising

Accepted Answer

A)  risk avoidance. 
B)  risk transfer. 
C)  risk acceptance. 
D)  risk control. 
E)  risk retention. 
A)  risk avoidance. 
B)  risk transfer. 
C)  risk acceptance. 
D)  risk control. 
E)  risk retention.

Jeremy has recently received merchandise along with invoices stating credit terms.Jeremy has most likely been given a(n)

Liability means responsibility for damages in case of accidental or deliberate harm to individuals or property.

Secured,short-term loans are usually secured by

Open-book credit is available only to companies that are financially strong.

What type of risk involves only the possibility of a loss?

Mary's company has decided to terminate its delivery system to avoid the risk of physical damage or injury.It is practising

As a result of financial scandals during the last few years,fewer finance managers are being appointed as CEOs of companies.

What is a promissory note?

A promissory note states when payment will be made and how much money will be paid to the seller in return for immediate credit.

Of the two basic types of long-term financing (debt and equity),debt is usually the best.

Risk control is

Mega Computers has just shipped one of its products to Compucell on faith that they will pay the invoice.This is a(n)

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

An insurable risk must satisfy all of the following criteria except

The risk associated with designing and distributing a new product is a(n)________ risk.

Corporation A has a capital structure of 40 percent equity and 60 percent debt,while Corporation B has a capital structure of 70 percent equity and 30 percent debt.Corporation A has the most conservative capital structure.

Debt financing appeals most strongly to companies that have predictable profits and cash-flow patterns.

Adrianna decided to purchase preferred shares because

The Gap has t-shirts boxed and ready to ship to retailers.These goods make up part of the ________ inventory.

A firm that buys an insurance policy to protect itself against automobile accidents is practising

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

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Exam 20: Financial Decisions and Risk Management

Jeremy has recently received merchandise along with invoices stating credit terms.Jeremy has most likely been given a(n)

Liability means responsibility for damages in case of accidental or deliberate harm to individuals or property.

Secured,short-term loans are usually secured by

Open-book credit is available only to companies that are financially strong.

What type of risk involves only the possibility of a loss?

Mary's company has decided to terminate its delivery system to avoid the risk of physical damage or injury.It is practising

As a result of financial scandals during the last few years,fewer finance managers are being appointed as CEOs of companies.

What is a promissory note?

A promissory note states when payment will be made and how much money will be paid to the seller in return for immediate credit.

Of the two basic types of long-term financing (debt and equity),debt is usually the best.

Risk control is

Mega Computers has just shipped one of its products to Compucell on faith that they will pay the invoice.This is a(n)

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

An insurable risk must satisfy all of the following criteria except

The risk associated with designing and distributing a new product is a(n)________ risk.

Corporation A has a capital structure of 40 percent equity and 60 percent debt,while Corporation B has a capital structure of 70 percent equity and 30 percent debt.Corporation A has the most conservative capital structure.

Debt financing appeals most strongly to companies that have predictable profits and cash-flow patterns.

Adrianna decided to purchase preferred shares because

The Gap has t-shirts boxed and ready to ship to retailers.These goods make up part of the ________ inventory.

A firm that buys an insurance policy to protect itself against automobile accidents is practising

Understanding the Canadian Business System

Understanding the Environments of Business

Conducting Business Ethically and Responsibly

Understanding Entrepreneurship, small Business, and New Venture Creation

The Global Context of Business

Managing the Business Enterprise

Managing Human Resources

Understanding Labourmanagement Relations

Motivating and Leading Employees

Producing Goods and Services

Increasing Productivity and Quality

Managing Information Systems and Communication Technology

Understanding Accounting Issues

Understanding Marketing Processes and Consumer Behaviour

Developing and Promoting Goods and Services

Pricing and Distributing Goods and Services

Understanding Money and Banking

Understanding Securities and Investments

Filters