Question 1

A German 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 equity financing?

Accepted Answer

A)  There is not much current investor interest in German companies. 
B)  The company doesn't know whether its international sales will be profitable. 
C)  The company employs some of the best engineers in Germany. 
D)  The company will achieve savings through economies of scale because it will be producing greater quantities of its products. 
E)  Venture capitalists have expressed great interest in the company.

Question 2

Identify,briefly describe,and give one example for each of the two types of long-term financing.

Accepted Answer

The answer of Identify,briefly describe,and give one example for each...

Question 3

What is financial control?

Accepted Answer

The answer of What is financial control?...

Question 4

A credit policy of "2/10,net 30" means

Accepted Answer

A)  That if a customer pays its bill within 10 days,it will receive a 30 percent discount. 
B)  That if a customer pays its bill within 30 days,it will receive a 10 percent discount. 
C)  That if a customer pays its bill within 2 days,it will receive a 10 percent discount. 
D)  That if a customer pays its bill within 10 days,it will receive a 2 percent discount. 
E)  None of these.

Question 5

If a company fails to make a bond payment,the company is in default.

Accepted Answer

A) True 
 B)False

Question 6

Price Steel issued 1000 common shares at a price of $15.00 each.If all the shares sold,Algoma could expect to raise

Accepted Answer

A)  $14 000. 
B)  $1500. 
C)  $15 000. 
D)  $1000. 
E)  it is not possible to tell with the information that is given.

Question 7

Paying employee medical costs out of company funds rather than buying insurance is an example of

Accepted Answer

A)  risk avoidance. 
B)  risk transfer. 
C)  risk control. 
D)  risk retention. 
E)  risk shift.

Question 8

Sallyanne is selling merchandise to a retailer using the terms of a trade draft.As a new employee of Sallyanne's,you discover that a trade draft is

Accepted Answer

A)  a means of pledging accounts receivable. 
B)  an agreement to meet certain terms,which is attached to the shipment and which must be signed before the goods are delivered to the buyer. 
C)  a legal agreement promising to pay for the goods,which is signed by the buyer before the seller will ship the goods. 
D)  a type of secured loan with trade products serving as collateral. 
E)  the seller ships products on faith that payment will be forthcoming.

Question 9

Which of the following is backed solely by the firm's promise to pay?

Accepted Answer

A)  Trade credit 
B)  Factoring accounts receivable 
C)  Promissory note 
D)  Commercial paper 
E)  Pledging accounts receivable

Question 10

Tony is responsible for planning and controlling the acquisition and dispersal of the company's financial assets.What is Tony's job title?

Accepted Answer

A)  Management information systems manager 
B)  Financial manager 
C)  Purchasing manager 
D)  Accounting manager 
E)  Chief risk manager

Question 11

A form of trade credit that is particularly useful for international transactions is a(n)

Accepted Answer

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

Question 12

Usually loans and bonds both carry fixed interest rates and must be paid regardless of how well the company is performing.

Accepted Answer

A) True 
 B)False

Question 13

Factoring accounts receivable is feasible only for the most creditworthy and largest firms.

Accepted Answer

A) True 
 B)False

Question 14

Secured loans allow borrowers to get funds when they might not qualify for unsecured credit.

Accepted Answer

A) True 
 B)False

Question 15

What is risk? What is the difference between speculative risk and pure risk? What is risk management?

Accepted Answer

The answer of What is risk? What is the difference...

Question 16

Although the bank may issue a line of credit to a business firm for a certain amount,the bank does not guarantee that the funds will be available when requested.

Accepted Answer

A) True 
 B)False

Question 17

With respect to inventory,which of the following is correct?

Accepted Answer

A)  Inventory is not an asset. 
B)  All inventory is an asset except work-in-process inventory. 
C)  Factoring inventory is generally a bad idea. 
D)  Finished goods inventory is twice the value of work-in-process inventory. 
E)  Rolls of denim at a Levi's factory is raw materials inventory.

Question 18

A survey of 600 executives conducted by Watson Gardner Brown found that the easiest jobs to staff are in the area of risk management because companies have begun to realize the importance of risk management to their survival.

Accepted Answer

A) True 
 B)False

Question 19

________ are fees paid by a policy-holder for insurance coverage.

Accepted Answer

A)  Dividends 
B)  Revenues 
C)  Receivables 
D)  Premiums 
E)  Dues

Question 20

What is a financial manager?

Accepted Answer

The answer of What is a financial manager?...

Exam 20: Financial Decisions and Risk Management

A German 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 equity financing?

Identify,briefly describe,and give one example for each of the two types of long-term financing.

What is financial control?

A credit policy of "2/10,net 30" means

If a company fails to make a bond payment,the company is in default.

Price Steel issued 1000 common shares at a price of $15.00 each.If all the shares sold,Algoma could expect to raise

Paying employee medical costs out of company funds rather than buying insurance is an example of

Sallyanne is selling merchandise to a retailer using the terms of a trade draft.As a new employee of Sallyanne's,you discover that a trade draft is

Which of the following is backed solely by the firm's promise to pay?

Tony is responsible for planning and controlling the acquisition and dispersal of the company's financial assets.What is Tony's job title?

A form of trade credit that is particularly useful for international transactions is a(n)

Usually loans and bonds both carry fixed interest rates and must be paid regardless of how well the company is performing.

Factoring accounts receivable is feasible only for the most creditworthy and largest firms.

Secured loans allow borrowers to get funds when they might not qualify for unsecured credit.

What is risk? What is the difference between speculative risk and pure risk? What is risk management?

Although the bank may issue a line of credit to a business firm for a certain amount,the bank does not guarantee that the funds will be available when requested.

With respect to inventory,which of the following is correct?

A survey of 600 executives conducted by Watson Gardner Brown found that the easiest jobs to staff are in the area of risk management because companies have begun to realize the importance of risk management to their survival.

________ are fees paid by a policy-holder for insurance coverage.

What is a financial manager?