Question 1

Bonds that have the highest default rate and the highest yield rate are ________ bonds.

Accepted Answer

A)  high grade 
B)  investment grade 
C)  mixed grade 
D)  income grade 
E)  junk 
A)  high grade 
B)  investment grade 
C)  mixed grade 
D)  income grade 
E)  junk

Question 2

Why does a business firm require long-term sources of funds?

Accepted Answer

A)  To finance long-term expenditures for fixed assets 
B)  A long-term source of funds replaces the need for insurance 
C)  To obtain funds for purchasing inventories 
D)  To eliminate the need for frequently seeking short-term financing 
E)  To finance annual bonus payments for employees 
A)  To finance long-term expenditures for fixed assets 
B)  A long-term source of funds replaces the need for insurance 
C)  To obtain funds for purchasing inventories 
D)  To eliminate the need for frequently seeking short-term financing 
E)  To finance annual bonus payments for employees

Question 3

________ are at the heart of financial control.

Accepted Answer

A)  Accounting managers 
B)  Budgets 
C)  Approval sign-offs 
D)  Financial managers 
E)  Authorized spending levels 
A)  Accounting managers 
B)  Budgets 
C)  Approval sign-offs 
D)  Financial managers 
E)  Authorized spending levels

Question 4

John bought $40 000 worth of receivables for 60 percent of that sum ($24 000).He will profit if the money he eventually collects exceeds the amount he paid for the receivables.John is involved in

Accepted Answer

A)  pledging accounts receivable. 
B)  leveraging goods-in-process inventory. 
C)  collateralizing inventory. 
D)  factoring accounts receivable. 
E)  hedging. 
A)  pledging accounts receivable. 
B)  leveraging goods-in-process inventory. 
C)  collateralizing inventory. 
D)  factoring accounts receivable. 
E)  hedging.

Question 5

John wants to implement a risk management program.What is the first thing he should do?

Accepted Answer

A)  Choose techniques that best handle the loss 
B)  Identify risks and potential losses 
C)  Implement the risk management program 
D)  Measure the frequency of losses 
E)  Transfer the risk 
A)  Choose techniques that best handle the loss 
B)  Identify risks and potential losses 
C)  Implement the risk management program 
D)  Measure the frequency of losses 
E)  Transfer the risk

Question 6

High quality cyclical common stocks are riskier than medium quality preferred shares.

Accepted Answer

A) True 
 B)False

Question 7

Along with a computer,Mega Computers has sent a document that states the promised payment date and amount.The buyer must sign it before taking the computer.This is a(n)

Accepted Answer

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

Question 8

Start-up firms without proven financial success usually must present a business plan to demonstrate that the firm is a good credit risk.

Accepted Answer

A) True 
 B)False

Question 9

Collateral is

Accepted Answer

A)  any asset that a lender has the right to seize if a borrower does not repay a secured loan. 
B)  when you use your forecasted sales to secure a loan. 
C)  the use of someone's signature in order to secure a loan. 
D)  when you use liquidated assets to pay off a loan. 
E)  any of these can be collateral. 
A)  any asset that a lender has the right to seize if a borrower does not repay a secured loan. 
B)  when you use your forecasted sales to secure a loan. 
C)  the use of someone's signature in order to secure a loan. 
D)  when you use liquidated assets to pay off a loan. 
E)  any of these can be collateral.

Question 10

High-grade corporate bonds rate low in terms of risk and high in terms of expected returns.

Accepted Answer

A) True 
 B)False

Question 11

Installing a new sprinkler system is an example of

Accepted Answer

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

Question 12

What are the three financial or operational areas that must be carefully managed by the financial manager to provide for short-term expenditures?

Accepted Answer

- accounts payable: to pay them on time,

Question 13

Which of the following guarantees that funds will be available?

Accepted Answer

A)  Trade credit 
B)  Pledging assets 
C)  Trade draft 
D)  Line of credit 
E)  Revolving credit agreement 
A)  Trade credit 
B)  Pledging assets 
C)  Trade draft 
D)  Line of credit 
E)  Revolving credit agreement

Question 14

Discuss the advantages and disadvantages of financing using preferred stock.

Accepted Answer

- Preferred stock is a form of hybrid fi

Question 15

Mega Computer needs a large amount of long-term financing for a long period of time.The best choice is most likely

Accepted Answer

A)  loans. 
B)  preferred stock. 
C)  common stock. 
D)  commercial paper. 
E)  bonds. 
A)  loans. 
B)  preferred stock. 
C)  common stock. 
D)  commercial paper. 
E)  bonds.

Question 16

Scott is managing a company and he has been advised by his financial manager that his largest source of short-term debt is too high.What source of funding is Scott's financial manager probably talking about?

Accepted Answer

A)  Inventory loans 
B)  Bank notes 
C)  Credit cards 
D)  Commercial paper 
E)  Accounts payable 
A)  Inventory loans 
B)  Bank notes 
C)  Credit cards 
D)  Commercial paper 
E)  Accounts payable

Question 17

One of the four characteristics of an insurable risk is ________.This means that the potential losses must be random and must occur independently of other losses.

Accepted Answer

A)  casualty 
B)  predictability 
C)  verifiability 
D)  profitability 
E)  unconnectedness 
A)  casualty 
B)  predictability 
C)  verifiability 
D)  profitability 
E)  unconnectedness

Question 18

To get a line of credit,the borrower must pay a commitment fee.

Accepted Answer

A) True 
 B)False

Question 19

There are several questions that must be answered when developing a financial plan,but the key question is this: "Which investment will likely make the highest return for the company?"

Accepted Answer

A) True 
 B)False

Question 20

Monolith Corp.'s credit rating is so high that it is able to issue ________,which is backed solely by the firm's promise to pay.

Accepted Answer

A)  accounts receivable 
B)  commercial paper 
C)  promissory notes 
D)  trade credit 
E)  debentures 
A)  accounts receivable 
B)  commercial paper 
C)  promissory notes 
D)  trade credit 
E)  debentures

Bonds that have the highest default rate and the highest yield rate are ________ bonds.

Why does a business firm require long-term sources of funds?

________ are at the heart of financial control.

John bought $40 000 worth of receivables for 60 percent of that sum ($24 000).He will profit if the money he eventually collects exceeds the amount he paid for the receivables.John is involved in

John wants to implement a risk management program.What is the first thing he should do?

High quality cyclical common stocks are riskier than medium quality preferred shares.

Along with a computer,Mega Computers has sent a document that states the promised payment date and amount.The buyer must sign it before taking the computer.This is a(n)

Start-up firms without proven financial success usually must present a business plan to demonstrate that the firm is a good credit risk.

Collateral is

High-grade corporate bonds rate low in terms of risk and high in terms of expected returns.

Installing a new sprinkler system is an example of

What are the three financial or operational areas that must be carefully managed by the financial manager to provide for short-term expenditures?

Which of the following guarantees that funds will be available?

Discuss the advantages and disadvantages of financing using preferred stock.

Mega Computer needs a large amount of long-term financing for a long period of time.The best choice is most likely

Scott is managing a company and he has been advised by his financial manager that his largest source of short-term debt is too high.What source of funding is Scott's financial manager probably talking about?

One of the four characteristics of an insurable risk is ________.This means that the potential losses must be random and must occur independently of other losses.

To get a line of credit,the borrower must pay a commitment fee.

There are several questions that must be answered when developing a financial plan,but the key question is this: "Which investment will likely make the highest return for the company?"

Monolith Corp.'s credit rating is so high that it is able to issue ________,which is backed solely by the firm's promise to pay.

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

Exam 20: Financial Decisions and Risk Management

Bonds that have the highest default rate and the highest yield rate are ________ bonds.

Why does a business firm require long-term sources of funds?

________ are at the heart of financial control.

John bought $40 000 worth of receivables for 60 percent of that sum ($24 000).He will profit if the money he eventually collects exceeds the amount he paid for the receivables.John is involved in

John wants to implement a risk management program.What is the first thing he should do?

High quality cyclical common stocks are riskier than medium quality preferred shares.

Along with a computer,Mega Computers has sent a document that states the promised payment date and amount.The buyer must sign it before taking the computer.This is a(n)

Start-up firms without proven financial success usually must present a business plan to demonstrate that the firm is a good credit risk.

Collateral is

High-grade corporate bonds rate low in terms of risk and high in terms of expected returns.

Installing a new sprinkler system is an example of

What are the three financial or operational areas that must be carefully managed by the financial manager to provide for short-term expenditures?

Which of the following guarantees that funds will be available?

Discuss the advantages and disadvantages of financing using preferred stock.

Mega Computer needs a large amount of long-term financing for a long period of time.The best choice is most likely

Scott is managing a company and he has been advised by his financial manager that his largest source of short-term debt is too high.What source of funding is Scott's financial manager probably talking about?

One of the four characteristics of an insurable risk is ________.This means that the potential losses must be random and must occur independently of other losses.

To get a line of credit,the borrower must pay a commitment fee.

There are several questions that must be answered when developing a financial plan,but the key question is this: "Which investment will likely make the highest return for the company?"

Monolith Corp.'s credit rating is so high that it is able to issue ________,which is backed solely by the firm's promise to pay.

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