Exam 20: Financial Decisions and Risk Management

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David is looking at a bill for supplies his company bought.It is dated May 1st and the terms are 2/10; net 30.In order to pay the least amount,when should he pay the bill?

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Which term is used to identify the business activity that is concerned with determining a firm's long-term investments,obtaining the funds to pay for those investments,and conducting the firm's everyday financial activities?

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Why is it necessary for a business firm to put up collateral when it takes out a bank loan?

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Jack is borrowing money which requires him to put up collateral.What type of credit is he using?

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Using retained earnings as a source of equity financing has one major disadvantage,which is

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In liquidation,shareholders must wait until creditors are paid; as well,preferred equity precedes common equity.

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Companies have traditionally had CEOs,CFOs,and COOs,but not CROs.

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Small businesses often fail to consider venture capital as a source of funding,and they are notorious for not planning cash-flow needs properly.

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When accounts receivable are used as collateral,the process is called factoring accounts receivable.

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Why is it necessary for a business firm to establish a credit policy?

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Accurate information about current cash status ensures good cash management.

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The risk associated with the chance of a warehouse fire is a(n)________ risk.

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Which of the following would be a likely result of using retained earnings to provide long-term funds?

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All of the following are responsibilities of the financial manager except

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What is the capital structure of a firm?

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Scott has been informed by his financial manager that his accounts receivable are being paid much too late.To fix this problem,Scott should

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The transfer of risk from one organization to another can be accomplished through the use of burglar alarms and security video services.

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Jerold Corp.recently bought a fire insurance policy.This is an example of which approach to risk?

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To increase a firm's value,financial managers must ensure that it has enough funds on hand to purchase the materials and human resources that it needs to produce goods and services.

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The process of using accounts receivable as collateral is called ___________; the specific means by which the money is raised is called ___________.

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