Question 1

Why is commercial paper an attractive short-term financing option?

Accepted Answer

Commercial paper is an attractive financing option because large amounts can be raised by selling commercial paper at rates that are generally less than those charged by banks. Commercial paper has been an attractive option because it allows for flexibility in borrowing. Large sums can be raised at short notice by firms that have outstanding credit scores. There are, however, several disadvantages in using such short-term debt. For example, during a period of high volatility such as we saw in late 2008, interest rates on commercial paper are backed only by the good name of the issuing corporation, thus a credit squeeze can leave borrowers with few lenders who are willing to take a risk on unsecured debt.

Question 2

A company would most likely finance ______ using short-term sources.

Accepted Answer

A)  inventory 
B)  buildings 
C)  another company 
D)  machinery 
A)  inventory 
B)  buildings 
C)  another company 
D)  machinery A

Question 3

List the major sources of short-term and long-term funds.

Accepted Answer

The major sources of short-term funds are trade credit, short-term loans, and commercial paper. The major sources of long-term funds are the public sale of stocks and bonds, private placements, and venture capital investments.

Question 4

A new firm is created from the assets divested when a spinoff occurs. Shareholders of the divesting firm become ______.

Accepted Answer

A)  owners lose their ownership status 
B)  shareholders of old firm only 
C)  shareholders of the new firm 
D)  bond holders 
A)  owners lose their ownership status 
B)  shareholders of old firm only 
C)  shareholders of the new firm 
D)  bond holders

Question 5

In most firms the controller is the chief accounting manager.

Accepted Answer

A) True 
 B)False

Question 6

Complete the following using the terms listed below.
-Stocks or bonds that are sold exclusively to a small group of large investors are known as ______.

Accepted Answer

A) venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)equity capital
G)financial plan
H)leverage 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)leverage 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 7

Debt capital consists of ______.

Accepted Answer

A)  funds provided by the firm's owners when they reinvest their earnings 
B)  funds obtained through borrowing 
C)  funds provided by the firm's owners when they make additional contributions 
D)  funds provided by outside investors 
A)  funds provided by the firm's owners when they reinvest their earnings 
B)  funds obtained through borrowing 
C)  funds provided by the firm's owners when they make additional contributions 
D)  funds provided by outside investors

Question 8

Complete the following using the terms listed below.
-A(n) ______ is an executive who develops and implements the firm's financial plan and determines the most appropriate sources and 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)leverage 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)leverage 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 9

The senior financial manager has the title of ______.

Accepted Answer

A)  chief financial officer 
B)  chief operations officer 
C)  treasurer 
D)  controller 
A)  chief financial officer 
B)  chief operations officer 
C)  treasurer 
D)  controller

Question 10

Most private placements are ______.

Accepted Answer

A)  Canadian government securities 
B)  corporate debt issues 
C)  corporate equity issues 
D)  municipal debt issues 
A)  Canadian government securities 
B)  corporate debt issues 
C)  corporate equity issues 
D)  municipal debt issues

Question 11

Interest rates on short-term investments move up and down frequently.

Accepted Answer

A) True 
 B)False

Question 12

Define accounts receivable and explain how they are managed.

Accepted Answer

Accounts receivable are uncollected cred

Question 13

Differentiate among the roles of vice president for financial management, treasurer, and controller.

Accepted Answer

The vice president for financial managem

Question 14

Short-term funds consist of ______.

Accepted Answer

A)  lower risk 
B)  long-term debt and equity 
C)  current liabilities 
D)  less expensive funds compared to long-term funds 
A)  lower risk 
B)  long-term debt and equity 
C)  current liabilities 
D)  less expensive funds compared to long-term funds

Question 15

Explain the concept of leverage.

Accepted Answer

Leverage is created by increasing the ra

Question 16

Explain the concept of risk-return trade-off.

Accepted Answer

Financial managers strive to m

Question 17

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

Accepted Answer

A) True 
 B)False

Question 18

Determining when a firm will need additional funds is one of the questions that needs answering when preparing a financial plan.

Accepted Answer

A) True 
 B)False

Question 19

All short-term bank loans are secured, meaning that the borrower pledges specific assets as collateral.

Accepted Answer

A) True 
 B)False

Question 20

Complete the following using the terms listed below.
-A(n) ______ is a sale of assets by a company.

Accepted Answer

A) venture capitalists 
B) private placements 
C) factoring 
D) capital investment analysis 
E) debt capital
F)equity capital
G)financial plan
H)leverage 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)leverage 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

Why is commercial paper an attractive short-term financing option?

A company would most likely finance ______ using short-term sources.

List the major sources of short-term and long-term funds.

A new firm is created from the assets divested when a spinoff occurs. Shareholders of the divesting firm become ______.

In most firms the controller is the chief accounting manager.

Complete the following using the terms listed below. -Stocks or bonds that are sold exclusively to a small group of large investors are known as ______.

Debt capital consists of ______.

Complete the following using the terms listed below. -A(n) ______ is an executive who develops and implements the firm's financial plan and determines the most appropriate sources and uses of funds.

The senior financial manager has the title of ______.

Most private placements are ______.

Interest rates on short-term investments move up and down frequently.

Define accounts receivable and explain how they are managed.

Differentiate among the roles of vice president for financial management, treasurer, and controller.

Short-term funds consist of ______.

Explain the concept of leverage.

Explain the concept of risk-return trade-off.

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

Determining when a firm will need additional funds is one of the questions that needs answering when preparing a financial plan.

All short-term bank loans are secured, meaning that the borrower pledges specific assets as collateral.

Complete the following using the terms listed below. -A(n) ______ is a sale of assets by a company.

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 Labour 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

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Exam 17: Financial Management

Why is commercial paper an attractive short-term financing option?

A company would most likely finance ______ using short-term sources.

List the major sources of short-term and long-term funds.

A new firm is created from the assets divested when a spinoff occurs. Shareholders of the divesting firm become ______.

In most firms the controller is the chief accounting manager.

Complete the following using the terms listed below. -Stocks or bonds that are sold exclusively to a small group of large investors are known as ______.

Debt capital consists of ______.

Complete the following using the terms listed below. -A(n) ______ is an executive who develops and implements the firm's financial plan and determines the most appropriate sources and uses of funds.

The senior financial manager has the title of ______.

Most private placements are ______.

Interest rates on short-term investments move up and down frequently.

Define accounts receivable and explain how they are managed.

Differentiate among the roles of vice president for financial management, treasurer, and controller.

Short-term funds consist of ______.

Explain the concept of leverage.

Explain the concept of risk-return trade-off.

Trade credit is relatively easy to obtain and costs nothing unless a supplier offers a cash discount.

Determining when a firm will need additional funds is one of the questions that needs answering when preparing a financial plan.

All short-term bank loans are secured, meaning that the borrower pledges specific assets as collateral.

Complete the following using the terms listed below. -A(n) ______ is a sale of assets by a company.

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 Labour 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