Question 1

Manitoba Hydro has relatively steady,predictable profits and cash-flow patterns.Its best choice for long-term funding is most likely

Accepted Answer

A)  factoring accounts receivable. 
B)  common stock. 
C)  either common or preferred stock but not bonds. 
D)  preferred stock. 
E)  bonds. 
A)  factoring accounts receivable. 
B)  common stock. 
C)  either common or preferred stock but not bonds. 
D)  preferred stock. 
E)  bonds.

Question 2

For Levi Strauss' jean-making operation,rolls of denim are considered __________,while cut-but-not-yet-sewn jeans are considered ___________ .

Accepted Answer

A)  work-in-process inventory; raw materials inventory 
B)  short-term capital; long-term capital 
C)  capital stock; supplies 
D)  raw materials inventory; work-in-process inventory 
E)  short-term credit; long-term credit 
A)  work-in-process inventory; raw materials inventory 
B)  short-term capital; long-term capital 
C)  capital stock; supplies 
D)  raw materials inventory; work-in-process inventory 
E)  short-term credit; long-term credit

Question 3

The possibility of a flood is pure risk,while the possibility of a new product failure is a speculative risk.

Accepted Answer

A) True 
 B)False

Question 4

All of the following are reasons for new start-up businesses being under-funded except

Accepted Answer

A)  entrepreneurs underestimate the value of establishing bank credit. 
B)  entrepreneurs use trade credit ineffectively. 
C)  entrepreneurs fail to consider venture capital as a source of funding. 
D)  entrepreneurs are notorious for not planning cash flow properly. 
E)  entrepreneurs rely too much on equity financing and not enough on debt financing. 
A)  entrepreneurs underestimate the value of establishing bank credit. 
B)  entrepreneurs use trade credit ineffectively. 
C)  entrepreneurs fail to consider venture capital as a source of funding. 
D)  entrepreneurs are notorious for not planning cash flow properly. 
E)  entrepreneurs rely too much on equity financing and not enough on debt financing.

Question 5

A manufacturing company is planning to go international.If the following facts were known,which one would weaken the case that the company should acquire the needed capital through debt financing?

Accepted Answer

A)  It has several marketing managers who already have international experience. 
B)  It expects rapid growth in its new international markets. 
C)  It plans to sell its products only in advanced industrial countries. 
D)  Its international business will grow slowly for the first several years. 
E)  It currently possesses engineering talent from all over the world. 
A)  It has several marketing managers who already have international experience. 
B)  It expects rapid growth in its new international markets. 
C)  It plans to sell its products only in advanced industrial countries. 
D)  Its international business will grow slowly for the first several years. 
E)  It currently possesses engineering talent from all over the world.

Question 6

Which of the following demonstrates good management of short-term debt?

Accepted Answer

A)  Delaying bill payments as long as possible 
B)  Selling stock instead of bonds 
C)  Paying bills when they are received 
D)  Prepaying taxes 
E)  Renting or leasing instead of buying 
A)  Delaying bill payments as long as possible 
B)  Selling stock instead of bonds 
C)  Paying bills when they are received 
D)  Prepaying taxes 
E)  Renting or leasing instead of buying

Question 7

Claremont Corp.wants to buy insurance to protect itself against the possibility of financial loss if its new product line does not sell well.But Claremont will find that no company will sell it such insurance because new product development violates the _____criterion for insurable risks.

Accepted Answer

A)  verifiability 
B)  casualty 
C)  unconnectedness 
D)  predictability 
E)  loss leader 
A)  verifiability 
B)  casualty 
C)  unconnectedness 
D)  predictability 
E)  loss leader

Question 8

Which of the following is the most conservative mix of long-term funding?

Accepted Answer

A)  25% debt,75% equity 
B)  75% debt,25% equity 
C)  100% equity 
D)  100% debt 
E)  50% debt,50% equity 
A)  25% debt,75% equity 
B)  75% debt,25% equity 
C)  100% equity 
D)  100% debt 
E)  50% debt,50% equity

Question 9

Identify and briefly describe the three key sources of unsecured,short-term funds.

Accepted Answer

- three types of unsecured short-term fu

Question 10

In most cases,equity financing takes two forms:

Accepted Answer

A)  revolving credit agreements and lines of credit. 
B)  bank loans and commercial paper. 
C)  issuing common stock and retaining the firm's earnings. 
D)  issuing common stock and lines of credit. 
E)  commercial paper and retaining the firm's earnings. 
A)  revolving credit agreements and lines of credit. 
B)  bank loans and commercial paper. 
C)  issuing common stock and retaining the firm's earnings. 
D)  issuing common stock and lines of credit. 
E)  commercial paper and retaining the firm's earnings.

Question 11

What is the difference between debt and equity financing?

Accepted Answer

A)  Debt financing is more expensive than equity financing. 
B)  Equity financing is cheaper than debt financing because no money has to be paid back to the people who bought the company's stock. 
C)  Debt financing is riskier than equity financing because with debt financing debts are incurred which must be paid back. 
D)  Debt financing is more short-term oriented than equity financing. 
E)  Equity financing can be done successfully only when stock markets are rising,whereas debt financing can be done any time. 
A)  Debt financing is more expensive than equity financing. 
B)  Equity financing is cheaper than debt financing because no money has to be paid back to the people who bought the company's stock. 
C)  Debt financing is riskier than equity financing because with debt financing debts are incurred which must be paid back. 
D)  Debt financing is more short-term oriented than equity financing. 
E)  Equity financing can be done successfully only when stock markets are rising,whereas debt financing can be done any time.

Question 12

Brenda is a top-level manager at Bricks 'n Bricks.To protect themselves against the loss of her talents and skills,the company should purchase

Accepted Answer

A)  liability insurance. 
B)  credit insurance. 
C)  key person insurance. 
D)  business interruption insurance. 
E)  workers' compensation coverage. 
A)  liability insurance. 
B)  credit insurance. 
C)  key person insurance. 
D)  business interruption insurance. 
E)  workers' compensation coverage.

Question 13

Molly has been very aggressive in her investment strategy and is currently invested in lower-quality common stocks.What type of investment would you recommend to Molly if she says she wants to move down one notch in risk?

Accepted Answer

A)  Medium-quality preferred stock and high-grade corporate bonds 
B)  Commercial paper and lower-quality common stocks 
C)  Junk bonds and medium-quality preferred stocks 
D)  Commercial paper and medium-quality preferred stocks 
E)  Junk bonds and high-quality cyclical common stocks 
A)  Medium-quality preferred stock and high-grade corporate bonds 
B)  Commercial paper and lower-quality common stocks 
C)  Junk bonds and medium-quality preferred stocks 
D)  Commercial paper and medium-quality preferred stocks 
E)  Junk bonds and high-quality cyclical common stocks

Question 14

It is in the firm's best interest to pay its accounts payables as rapidly as possible.

Accepted Answer

A) True 
 B)False

Question 15

Financial managers must pay more attention to accounts receivable than accounts payable because accounts receivable provides the funds the company needs to stay in business.

Accepted Answer

A) True 
 B)False

Question 16

A "gentlemen's agreement" to pay for products purchased is known as

Accepted Answer

A)  commercial paper. 
B)  open-book credit. 
C)  a promissory note. 
D)  a trade draft. 
E)  trade credit. 
A)  commercial paper. 
B)  open-book credit. 
C)  a promissory note. 
D)  a trade draft. 
E)  trade credit.

Question 17

Henry has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously given.Which of the following will be impacted by this change?

Accepted Answer

A)  Inventories 
B)  Raw materials inventory 
C)  Accounts receivable 
D)  Capital expenditures 
E)  Cash flow 
A)  Inventories 
B)  Raw materials inventory 
C)  Accounts receivable 
D)  Capital expenditures 
E)  Cash flow

Question 18

When is a commitment fee required of the borrower by a lending institution?

Accepted Answer

A)  When using a revolving credit agreement in which the bank holds an open line of credit for a borrower 
B)  When issuing commercial paper 
C)  A commitment fee is never required because it is illegal for lending institutions to charge a commitment fee 
D)  When using collateral to secure a bank loan 
E)  When using trade credit 
A)  When using a revolving credit agreement in which the bank holds an open line of credit for a borrower 
B)  When issuing commercial paper 
C)  A commitment fee is never required because it is illegal for lending institutions to charge a commitment fee 
D)  When using collateral to secure a bank loan 
E)  When using trade credit

Question 19

Work-in-process inventory includes things like t-shirts that are packaged and ready to be shipped to customers.

Accepted Answer

A) True 
 B)False

Question 20

Sally is looking at an invoice dated July 1st for $1000 that has terms of 2/10; net 30.If she pays the bill on July 3rd how much should she write the cheque for?

Accepted Answer

A)  $900 
B)  $980 
C)  $998 
D)  $1000 
E)  $700 
A)  $900 
B)  $980 
C)  $998 
D)  $1000 
E)  $700

Manitoba Hydro has relatively steady,predictable profits and cash-flow patterns.Its best choice for long-term funding is most likely

For Levi Strauss' jean-making operation,rolls of denim are considered ,while cut-but-not-yet-sewn jeans are considered _ .

The possibility of a flood is pure risk,while the possibility of a new product failure is a speculative risk.

All of the following are reasons for new start-up businesses being under-funded except

A manufacturing company is planning to go international.If the following facts were known,which one would weaken the case that the company should acquire the needed capital through debt financing?

Which of the following demonstrates good management of short-term debt?

Claremont Corp.wants to buy insurance to protect itself against the possibility of financial loss if its new product line does not sell well.But Claremont will find that no company will sell it such insurance because new product development violates the _____criterion for insurable risks.

Which of the following is the most conservative mix of long-term funding?

Identify and briefly describe the three key sources of unsecured,short-term funds.

In most cases,equity financing takes two forms:

What is the difference between debt and equity financing?

Brenda is a top-level manager at Bricks 'n Bricks.To protect themselves against the loss of her talents and skills,the company should purchase

Molly has been very aggressive in her investment strategy and is currently invested in lower-quality common stocks.What type of investment would you recommend to Molly if she says she wants to move down one notch in risk?

It is in the firm's best interest to pay its accounts payables as rapidly as possible.

Financial managers must pay more attention to accounts receivable than accounts payable because accounts receivable provides the funds the company needs to stay in business.

A "gentlemen's agreement" to pay for products purchased is known as

Henry has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously given.Which of the following will be impacted by this change?

When is a commitment fee required of the borrower by a lending institution?

Work-in-process inventory includes things like t-shirts that are packaged and ready to be shipped to customers.

Sally is looking at an invoice dated July 1st for $1000 that has terms of 2/10; net 30.If she pays the bill on July 3rd how much should she write the cheque for?

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

Manitoba Hydro has relatively steady,predictable profits and cash-flow patterns.Its best choice for long-term funding is most likely

For Levi Strauss' jean-making operation,rolls of denim are considered __________,while cut-but-not-yet-sewn jeans are considered ___________ .

The possibility of a flood is pure risk,while the possibility of a new product failure is a speculative risk.

All of the following are reasons for new start-up businesses being under-funded except

A manufacturing company is planning to go international.If the following facts were known,which one would weaken the case that the company should acquire the needed capital through debt financing?

Which of the following demonstrates good management of short-term debt?

Claremont Corp.wants to buy insurance to protect itself against the possibility of financial loss if its new product line does not sell well.But Claremont will find that no company will sell it such insurance because new product development violates the _____criterion for insurable risks.

Which of the following is the most conservative mix of long-term funding?

Identify and briefly describe the three key sources of unsecured,short-term funds.

In most cases,equity financing takes two forms:

What is the difference between debt and equity financing?

Brenda is a top-level manager at Bricks 'n Bricks.To protect themselves against the loss of her talents and skills,the company should purchase

Molly has been very aggressive in her investment strategy and is currently invested in lower-quality common stocks.What type of investment would you recommend to Molly if she says she wants to move down one notch in risk?

It is in the firm's best interest to pay its accounts payables as rapidly as possible.

Financial managers must pay more attention to accounts receivable than accounts payable because accounts receivable provides the funds the company needs to stay in business.

A "gentlemen's agreement" to pay for products purchased is known as

Henry has received notice from a supplier that all invoices must be paid within 30 days rather than 60 days as previously given.Which of the following will be impacted by this change?

When is a commitment fee required of the borrower by a lending institution?

Work-in-process inventory includes things like t-shirts that are packaged and ready to be shipped to customers.

Sally is looking at an invoice dated July 1st for $1000 that has terms of 2/10; net 30.If she pays the bill on July 3rd how much should she write the cheque for?

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

For Levi Strauss' jean-making operation,rolls of denim are considered ,while cut-but-not-yet-sewn jeans are considered _ .