Question 1

What are the methods used by business firms to cope with risk?

Accepted Answer

- risk avoidance: stopping participation

Question 2

What is the difference between a trade draft and a trade acceptance?

Accepted Answer

A trade draft is a form of tra

Question 3

Which of the following is not a responsibility of financial managers?

Accepted Answer

A)  Determining a firm's long-term investments 
B)  Managing risks 
C)  Obtaining loans 
D)  Identifying markets for the company's products in order to ensure good cash flow 
E)  Conducting the firm's everyday financial activities 
A)  Determining a firm's long-term investments 
B)  Managing risks 
C)  Obtaining loans 
D)  Identifying markets for the company's products in order to ensure good cash flow 
E)  Conducting the firm's everyday financial activities

Question 4

Briefly explain the three general objectives of a financial manager.

Accepted Answer

- cash flow management: managing the pat

Question 5

The two primary sources of debt financing are pledging accounts receivable and selling bonds.

Accepted Answer

A) True 
 B)False

Question 6

Paying dividends is more expensive than paying bond interest because interest paid to bondholders is tax deductible,but dividends paid to shareholders are not.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is usually associated with unsecured short-term loans?

Accepted Answer

A)  Trade drafts 
B)  Compensating balances 
C)  Collateral 
D)  Trade acceptances 
E)  Factoring 
A)  Trade drafts 
B)  Compensating balances 
C)  Collateral 
D)  Trade acceptances 
E)  Factoring

Question 8

A company that pledges accounts receivable is probably in financial difficulty.

Accepted Answer

A) True 
 B)False

Question 9

Most corporations get their long-term loans from a chartered bank.

Accepted Answer

A) True 
 B)False

Question 10

What are the five steps in the risk management process?

Accepted Answer

- Step 1: Identify risks and potential l

Question 11

ATC Machine Shops sends its ________ inventory to Warm Inc.to have its manufactured tools heat-treated.

Accepted Answer

A)  raw materials 
B)  work-in-process 
C)  capital goods 
D)  finished goods 
E)  supplies 
A)  raw materials 
B)  work-in-process 
C)  capital goods 
D)  finished goods 
E)  supplies

Question 12

Equity financing via common stock can be more expensive than issuing bonds because

Accepted Answer

A)  common stocks must be insured. 
B)  there is more administration involved. 
C)  common stocks are backed by retained earnings. 
D)  common stock must be sold through a broker. 
E)  interest paid to bondholders is a tax-deductible business expense,but stock dividends are not tax-deductible. 
A)  common stocks must be insured. 
B)  there is more administration involved. 
C)  common stocks are backed by retained earnings. 
D)  common stock must be sold through a broker. 
E)  interest paid to bondholders is a tax-deductible business expense,but stock dividends are not tax-deductible.

Question 13

Debt financing refers to the long-term borrowing of funds from outside the company.

Accepted Answer

A) True 
 B)False

Question 14

________ risks involve the possibility of gain or loss.

Accepted Answer

A)  "Acts of God" 
B)  Financial 
C)  Speculative 
D)  Pure 
E)  Market 
A)  "Acts of God" 
B)  Financial 
C)  Speculative 
D)  Pure 
E)  Market

Question 15

Firms can practice risk transfer through loss prevention or loss reduction techniques.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following represents the overall objective of financial managers?

Accepted Answer

A)  To ensure that the company has enough funds on hand to purchase materials needed to produce goods and services 
B)  To ensure that the company has enough money to pay for its debts 
C)  To increase the supply of money for the economy 
D)  To increase the value of the firm and thus to increase shareholder wealth 
E)  To manage the firm's cash flow 
A)  To ensure that the company has enough funds on hand to purchase materials needed to produce goods and services 
B)  To ensure that the company has enough money to pay for its debts 
C)  To increase the supply of money for the economy 
D)  To increase the value of the firm and thus to increase shareholder wealth 
E)  To manage the firm's cash flow

Question 17

Which type of insurance would protect a business firm when a fire in its manufacturing facility spreads and destroys a nearby home?

Accepted Answer

A)  Health insurance 
B)  Life insurance 
C)  Property insurance 
D)  Liability insurance 
E)  Automobile insurance 
A)  Health insurance 
B)  Life insurance 
C)  Property insurance 
D)  Liability insurance 
E)  Automobile insurance

Question 18

The two primary sources of long-term debt funds are

Accepted Answer

A)  lines of credit and revolving credit agreements. 
B)  common stock and preferred stock. 
C)  trade credit and commercial paper. 
D)  commercial paper and bank loans. 
E)  long-term loans and the sale of bonds. 
A)  lines of credit and revolving credit agreements. 
B)  common stock and preferred stock. 
C)  trade credit and commercial paper. 
D)  commercial paper and bank loans. 
E)  long-term loans and the sale of bonds.

Question 19

________ means that the insurer must be able to use statistical tools to forecast the likelihood of loss.

Accepted Answer

A)  Casualty 
B)  Verifiability 
C)  Unconnectedness 
D)  Profitability 
E)  Predictability 
A)  Casualty 
B)  Verifiability 
C)  Unconnectedness 
D)  Profitability 
E)  Predictability

Question 20

A company is faced with an unexpected shutdown because of a natural disaster.It would be protected from loss while it is preparing to reopen if it had purchased

Accepted Answer

A)  business interruption insurance. 
B)  credit insurance. 
C)  automobile insurance. 
D)  premises liability insurance. 
E)  damage insurance. 
A)  business interruption insurance. 
B)  credit insurance. 
C)  automobile insurance. 
D)  premises liability insurance. 
E)  damage insurance.

What are the methods used by business firms to cope with risk?

What is the difference between a trade draft and a trade acceptance?

Which of the following is not a responsibility of financial managers?

Briefly explain the three general objectives of a financial manager.

The two primary sources of debt financing are pledging accounts receivable and selling bonds.

Paying dividends is more expensive than paying bond interest because interest paid to bondholders is tax deductible,but dividends paid to shareholders are not.

Which of the following is usually associated with unsecured short-term loans?

A company that pledges accounts receivable is probably in financial difficulty.

Most corporations get their long-term loans from a chartered bank.

What are the five steps in the risk management process?

ATC Machine Shops sends its ________ inventory to Warm Inc.to have its manufactured tools heat-treated.

Equity financing via common stock can be more expensive than issuing bonds because

Debt financing refers to the long-term borrowing of funds from outside the company.

________ risks involve the possibility of gain or loss.

Firms can practice risk transfer through loss prevention or loss reduction techniques.

Which of the following represents the overall objective of financial managers?

Which type of insurance would protect a business firm when a fire in its manufacturing facility spreads and destroys a nearby home?

The two primary sources of long-term debt funds are

________ means that the insurer must be able to use statistical tools to forecast the likelihood of loss.

A company is faced with an unexpected shutdown because of a natural disaster.It would be protected from loss while it is preparing to reopen if it had purchased

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 are the methods used by business firms to cope with risk?

What is the difference between a trade draft and a trade acceptance?

Which of the following is not a responsibility of financial managers?

Briefly explain the three general objectives of a financial manager.

The two primary sources of debt financing are pledging accounts receivable and selling bonds.

Paying dividends is more expensive than paying bond interest because interest paid to bondholders is tax deductible,but dividends paid to shareholders are not.

Which of the following is usually associated with unsecured short-term loans?

A company that pledges accounts receivable is probably in financial difficulty.

Most corporations get their long-term loans from a chartered bank.

What are the five steps in the risk management process?

ATC Machine Shops sends its ________ inventory to Warm Inc.to have its manufactured tools heat-treated.

Equity financing via common stock can be more expensive than issuing bonds because

Debt financing refers to the long-term borrowing of funds from outside the company.

________ risks involve the possibility of gain or loss.

Firms can practice risk transfer through loss prevention or loss reduction techniques.

Which of the following represents the overall objective of financial managers?

Which type of insurance would protect a business firm when a fire in its manufacturing facility spreads and destroys a nearby home?

The two primary sources of long-term debt funds are

________ means that the insurer must be able to use statistical tools to forecast the likelihood of loss.

A company is faced with an unexpected shutdown because of a natural disaster.It would be protected from loss while it is preparing to reopen if it had purchased

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