Question 1

Debt is frequently the least costly method of raising additional financing dollars, one of the reasons it is so frequently used.

Accepted Answer

A) True 
 B)False

Question 2

Short-term assets are expected to be converted into cash within _____.

Accepted Answer

A)  a month 
B)  a year 
C)  four months 
D)  six months 
A)  a month 
B)  a year 
C)  four months 
D)  six months

Question 3

Hedge funds are private investment companies open only to large qualified investors.

Accepted Answer

A) True 
 B)False

Question 4

Financial managers are responsible for increasing profits to shareholders.

Accepted Answer

A) True 
 B)False

Question 5

The major purpose of cash is to pay day-to-day expenses.

Accepted Answer

A) True 
 B)False

Question 6

In many companies, the CEO is promoted to the position of CFO.

Accepted Answer

A) True 
 B)False

Question 7

Explain what can be indicated by the growing importance of financial professionals.

Accepted Answer

The growing importance of financial prof

Question 8

_____ are investment companies that raise funds from wealthy individuals and institutional investors and use the funds to make investments in both public and private companies.

Accepted Answer

A)  Venture capitalists 
B)  Private placements 
C)  Hedge funds 
D)  Private equity funds 
A)  Venture capitalists 
B)  Private placements 
C)  Hedge funds 
D)  Private equity funds

Question 9

Short-term sources of funds are loans that are repaid within one year.

Accepted Answer

A) True 
 B)False

Question 10

Describe a disadvantage of equity capital.

Accepted Answer

Equity capital is more expensive than de

Question 11

Which of the following is the best definition of financial risk?

Accepted Answer

A)  It is the uncertainty regarding the gain or loss from an investment. 
B)  It is the uncertainty that an investment's actual return will be less than its expected return. 
C)  It is the possibility that an investment will earn a negative return. 
D)  It is the possibility that an investment will lose money. 
A)  It is the uncertainty regarding the gain or loss from an investment. 
B)  It is the uncertainty that an investment's actual return will be less than its expected return. 
C)  It is the possibility that an investment will earn a negative return. 
D)  It is the possibility that an investment will lose money.

Question 12

Paul, a financial manager at Faxeltel Inc., holds a meeting to discuss various aspects of investment in long-lived assets. The meeting takes into consideration the buying of new assets and the replacement of old assets. In the context of financial management, this type of decision making is called _____.

Accepted Answer

A)  capital investment analysis 
B)  risk-return trade-off 
C)  leveraged buyout analysis 
D)  divestiture planning 
A)  capital investment analysis 
B)  risk-return trade-off 
C)  leveraged buyout analysis 
D)  divestiture planning

Question 13

MATCHING
Complete the following using the terms listed.
-An offer made by an outside investor or firm to the target firm's shareholders is a(n) _____.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 14

Increasing leverage decreases management's flexibility in future financing decisions.

Accepted Answer

A) True 
 B)False

Question 15

What is an LBO?

Accepted Answer

LBO-leveraged buyout-is a transaction wh

Question 16

Rexton Pharmaceuticals needs to raise funds to buy new production equipment. The financial manager would probably suggest that his company raise debt capital by _____.

Accepted Answer

A)  using accumulated earnings 
B)  selling stock 
C)  selling marketable securities 
D)  borrowing money from a bank 
A)  using accumulated earnings 
B)  selling stock 
C)  selling marketable securities 
D)  borrowing money from a bank

Question 17

MATCHING
Complete the following using the terms listed.
-_____ consists of funds provided by a firm's owners when they reinvest earnings, make additional contributions, liquidate assets, issue stock, or raise capital.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 18

MATCHING
Complete the following using the terms listed.
-A(n) _____is a document that specifies the funds a firm will need for a period of time, the time of inflows and outflows, and the most appropriate uses of funds.

Accepted Answer

A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds 
A) Venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)Equity capital
G)financial plan
H)leveraged buyout
I)private equity funds
J)divestiture
K)Marketable securities
L)financial manager
M)tender offer
N)Trade credit
O)leverage
P)capital structure
Q)Asset intensity
R)bonds

Question 19

Two types of divestitures are _____.

Accepted Answer

A)  sell-offs and trade-offs 
B)  trade-offs and spin-offs 
C)  buy-offs and spin-offs 
D)  sell-offs and spin-offs 
A)  sell-offs and trade-offs 
B)  trade-offs and spin-offs 
C)  buy-offs and spin-offs 
D)  sell-offs and spin-offs

Question 20

In a quarterly meeting, Rand, a financial manager at InVest Inc., states that the company will benefit in the long term by utilizing a mix of debentures than focusing only on issuing shares. He states that this strategy will give his company a positive _____, which will increase the rate of return of the firm.

Accepted Answer

A)  risk-return trade-off 
B)  leverage 
C)  hedge fund advantage 
D)  divestiture 
A)  risk-return trade-off 
B)  leverage 
C)  hedge fund advantage 
D)  divestiture

Debt is frequently the least costly method of raising additional financing dollars, one of the reasons it is so frequently used.

Short-term assets are expected to be converted into cash within _____.

Hedge funds are private investment companies open only to large qualified investors.

Financial managers are responsible for increasing profits to shareholders.

The major purpose of cash is to pay day-to-day expenses.

In many companies, the CEO is promoted to the position of CFO.

Explain what can be indicated by the growing importance of financial professionals.

_____ are investment companies that raise funds from wealthy individuals and institutional investors and use the funds to make investments in both public and private companies.

Short-term sources of funds are loans that are repaid within one year.

Describe a disadvantage of equity capital.

Which of the following is the best definition of financial risk?

MATCHING Complete the following using the terms listed. -An offer made by an outside investor or firm to the target firm's shareholders is a(n) _____.

Increasing leverage decreases management's flexibility in future financing decisions.

What is an LBO?

Rexton Pharmaceuticals needs to raise funds to buy new production equipment. The financial manager would probably suggest that his company raise debt capital by _____.

MATCHING Complete the following using the terms listed. -_____ consists of funds provided by a firm's owners when they reinvest earnings, make additional contributions, liquidate assets, issue stock, or raise capital.

MATCHING Complete the following using the terms listed. -A(n) _____is a document that specifies the funds a firm will need for a period of time, the time of inflows and outflows, and the most appropriate uses of funds.

Two types of divestitures are _____.

The Changing Face of Business

Business Ethics and Social Responsibility

Economic Challenges Facing Contemporary Business

Competing in World Markets

Forms of Business Ownership and Organization

Starting Your Own Business: the Entrepreneurship Alternative

Management, Leadership, and the Internal Organization

Human Resource Management: From Recruitment to Labor Relations

Top Performance Through Empowerment, Teamwork, and Communication

Production and Operations Management

Customer-Driven Marketing

Product and Distribution Strategies

Promotion and Pricing Strategies

Using Technology to Manage Information

Understanding Accounting and Financial Statements

The Financial System

Filters

Exam 17: Financial Management

Debt is frequently the least costly method of raising additional financing dollars, one of the reasons it is so frequently used.

Short-term assets are expected to be converted into cash within _____.

Hedge funds are private investment companies open only to large qualified investors.

Financial managers are responsible for increasing profits to shareholders.

The major purpose of cash is to pay day-to-day expenses.

In many companies, the CEO is promoted to the position of CFO.

Explain what can be indicated by the growing importance of financial professionals.

_____ are investment companies that raise funds from wealthy individuals and institutional investors and use the funds to make investments in both public and private companies.

Short-term sources of funds are loans that are repaid within one year.

Describe a disadvantage of equity capital.

Which of the following is the best definition of financial risk?

MATCHING Complete the following using the terms listed. -An offer made by an outside investor or firm to the target firm's shareholders is a(n) _____.

Increasing leverage decreases management's flexibility in future financing decisions.

What is an LBO?

Rexton Pharmaceuticals needs to raise funds to buy new production equipment. The financial manager would probably suggest that his company raise debt capital by _____.

MATCHING Complete the following using the terms listed. -_____ consists of funds provided by a firm's owners when they reinvest earnings, make additional contributions, liquidate assets, issue stock, or raise capital.

MATCHING Complete the following using the terms listed. -A(n) _____is a document that specifies the funds a firm will need for a period of time, the time of inflows and outflows, and the most appropriate uses of funds.

Two types of divestitures are _____.

The Changing Face of Business

Business Ethics and Social Responsibility

Economic Challenges Facing Contemporary Business

Competing in World Markets

Forms of Business Ownership and Organization

Starting Your Own Business: the Entrepreneurship Alternative

Management, Leadership, and the Internal Organization

Human Resource Management: From Recruitment to Labor Relations

Top Performance Through Empowerment, Teamwork, and Communication

Production and Operations Management

Customer-Driven Marketing

Product and Distribution Strategies

Promotion and Pricing Strategies

Using Technology to Manage Information

Understanding Accounting and Financial Statements

The Financial System

Filters