Question 1

What is a line of credit?

Accepted Answer

A line of credit is a standing

Question 2

Capital expenditures are essentially the same as operating expenditures except they last longer than one year.

Accepted Answer

A) True 
 B)False

Question 3

The bond indenture specifies the terms of the bond and any collateral supporting the bond.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  It will likely have slim profit margins in its international sales. 
B)  It will have to hire many new salespeople to make the international move work. 
C)  It will have a new,steady stream of revenue from its international sales. 
D)  It will launch several new product lines very soon. 
E)  It will have to conduct training sessions for its international employees. 
A)  It will likely have slim profit margins in its international sales. 
B)  It will have to hire many new salespeople to make the international move work. 
C)  It will have a new,steady stream of revenue from its international sales. 
D)  It will launch several new product lines very soon. 
E)  It will have to conduct training sessions for its international employees.

Question 5

Laura is analyzing several investment possibilities.She finds that some options have a good chance of a payback (but the paybacks are small),while other options have a not-so-good chance of payback (but the payback is large).She has discovered the

Accepted Answer

A)  cash flow trade-off. 
B)  cash flow decision. 
C)  risk-return relationship. 
D)  safety factor. 
E)  risk principle. 
A)  cash flow trade-off. 
B)  cash flow decision. 
C)  risk-return relationship. 
D)  safety factor. 
E)  risk principle.

Question 6

Which of the following is a restriction that may be placed on a borrowing firm for a long-term loan?

Accepted Answer

A)  The borrower must pledge a certain amount of inventory. 
B)  The borrower must pledge future sales. 
C)  The borrower must factor accounts receivable. 
D)  The borrower must pledge long-term assets as collateral. 
E)  The borrower must pledge accounts receivable. 
A)  The borrower must pledge a certain amount of inventory. 
B)  The borrower must pledge future sales. 
C)  The borrower must factor accounts receivable. 
D)  The borrower must pledge long-term assets as collateral. 
E)  The borrower must pledge accounts receivable.

Question 7

What are the customary methods of long-term debt financing? Which methods do most corporations use as their major source of long-term debt financing?

Accepted Answer

- long-term loans:extend three to ten ye

Question 8

Open-book credit is a secured short-term loan that requires that the borrower put up collateral.

Accepted Answer

A) True 
 B)False

Question 9

Beta Corp.is considering an IPO in order to raise money.If the following facts were known,which one would strengthen the case for doing an IPO?

Accepted Answer

A)  The company expects its stock price to be low. 
B)  Internal control over decision making is important to company executives. 
C)  The company's customer base has been declining. 
D)  The company has a healthy list of assets. 
E)  The company is carrying a significant debt load. 
A)  The company expects its stock price to be low. 
B)  Internal control over decision making is important to company executives. 
C)  The company's customer base has been declining. 
D)  The company has a healthy list of assets. 
E)  The company is carrying a significant debt load.

Question 10

The mix of debt and equity funding that a firm uses is called its

Accepted Answer

A)  long-term funding mix. 
B)  financial mix. 
C)  corporate capital mix. 
D)  capital structure. 
E)  debt-to-equity ratio. 
A)  long-term funding mix. 
B)  financial mix. 
C)  corporate capital mix. 
D)  capital structure. 
E)  debt-to-equity ratio.

Question 11

Equity financing puts more constraints on management than debt financing.

Accepted Answer

A) True 
 B)False

Question 12

At Coast Capital Savings Credit Union,one top manager focuses on protecting the company against online fraud,holdups,and information system failures.This person is a Chief Risk Officer.

Accepted Answer

A) True 
 B)False

Question 13

Define and describe the process of factoring.

Accepted Answer

- A firm can raise funds rapidly by fact

Question 14

What is the risk-return relationship?

Accepted Answer

- the higher the risk,the more

Question 15

What are the four criteria that an insurable risk must satisfy? Explain.

Accepted Answer

- predictability: the insurer must be ab

Question 16

What do credit terms of 2/10; net 30 refer to?

Accepted Answer

The selling company is offerin

Question 17

The accounting manager is usually responsible for cash flow management.

Accepted Answer

A) True 
 B)False

Question 18

What are the two primary sources of debt financing?

Accepted Answer

Long-term

Question 19

Landsdowne Corp.has decided to insure its buildings and equipment against loss by fire.It is practising risk control.

Accepted Answer

A) True 
 B)False

Question 20

Before shipping a computer,Mega Computers insists that the buyer sign a document that states when and how much money will be paid.This is a(n)

Accepted Answer

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

What is a line of credit?

Capital expenditures are essentially the same as operating expenditures except they last longer than one year.

The bond indenture specifies the terms of the bond and any collateral supporting the bond.

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

Laura is analyzing several investment possibilities.She finds that some options have a good chance of a payback (but the paybacks are small),while other options have a not-so-good chance of payback (but the payback is large).She has discovered the

Which of the following is a restriction that may be placed on a borrowing firm for a long-term loan?

What are the customary methods of long-term debt financing? Which methods do most corporations use as their major source of long-term debt financing?

Open-book credit is a secured short-term loan that requires that the borrower put up collateral.

Beta Corp.is considering an IPO in order to raise money.If the following facts were known,which one would strengthen the case for doing an IPO?

The mix of debt and equity funding that a firm uses is called its

Equity financing puts more constraints on management than debt financing.

At Coast Capital Savings Credit Union,one top manager focuses on protecting the company against online fraud,holdups,and information system failures.This person is a Chief Risk Officer.

Define and describe the process of factoring.

What is the risk-return relationship?

What are the four criteria that an insurable risk must satisfy? Explain.

What do credit terms of 2/10; net 30 refer to?

The accounting manager is usually responsible for cash flow management.

What are the two primary sources of debt financing?

Landsdowne Corp.has decided to insure its buildings and equipment against loss by fire.It is practising risk control.

Before shipping a computer,Mega Computers insists that the buyer sign a document that states when and how much money will be paid.This is a(n)

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

What is a line of credit?

Capital expenditures are essentially the same as operating expenditures except they last longer than one year.

The bond indenture specifies the terms of the bond and any collateral supporting the bond.

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

Laura is analyzing several investment possibilities.She finds that some options have a good chance of a payback (but the paybacks are small),while other options have a not-so-good chance of payback (but the payback is large).She has discovered the

Which of the following is a restriction that may be placed on a borrowing firm for a long-term loan?

What are the customary methods of long-term debt financing? Which methods do most corporations use as their major source of long-term debt financing?

Open-book credit is a secured short-term loan that requires that the borrower put up collateral.

Beta Corp.is considering an IPO in order to raise money.If the following facts were known,which one would strengthen the case for doing an IPO?

The mix of debt and equity funding that a firm uses is called its

Equity financing puts more constraints on management than debt financing.

At Coast Capital Savings Credit Union,one top manager focuses on protecting the company against online fraud,holdups,and information system failures.This person is a Chief Risk Officer.

Define and describe the process of factoring.

What is the risk-return relationship?

What are the four criteria that an insurable risk must satisfy? Explain.

What do credit terms of 2/10; net 30 refer to?

The accounting manager is usually responsible for cash flow management.

What are the two primary sources of debt financing?

Landsdowne Corp.has decided to insure its buildings and equipment against loss by fire.It is practising risk control.

Before shipping a computer,Mega Computers insists that the buyer sign a document that states when and how much money will be paid.This is a(n)

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