Question 1

The NYSE, along with other NYSE Euronext exchanges, lists over 8,500 different issues.

Accepted Answer

A) True 
 B)False

Question 2

A venture capital firm

Accepted Answer

A)   provides financing to only large businesses.
B)   looks for business that will provide a steady, average return.
C)   receives corporate bonds from firms it finances.
D)   consists of a pool of investors or a family partnership.
E)   is a large, diversified corporation looking for investment opportunities.

Question 3

The highest cost of short-term finance generally is

Accepted Answer

A)   trade credit.
B)   unsecured bank loans.
C)   commercial paper.
D)   factoring.
E)   promissory notes.

Question 4

Rosemary Wyatt bought preferred stock issued by General Products, Inc.The stock has a par value of €100 and pays 7 percent.The dividend for this preferred stock issue is

Accepted Answer

A)   €1.00.
B)   €3.25.
C)   €3.88.
D)   €5.12.
E)   €7.00.

Question 5

During the recent economic crisis, the number of business bankruptcies actually declined..

Accepted Answer

A) True 
 B)False

Question 6

The lowest rate of interest charged by a bank for a short-term loan is known as

Accepted Answer

A)   the discount rate.
B)   dividends.
C)   add-on interest.
D)   the compound interest rate.
E)   the prime interest rate.

Question 7

During the recent economic crisis, many companies found that it was

Accepted Answer

A)   accessible and easy to acquire and use many of the traditional sources of short- and long-term financing that they were accustomed to.
B)   easy to shift their methods of financing from one traditional method to another.
C)   an opportune time to acquire long-term loans and build their current inventory.
D)   increasingly difficult to acquire and use many of the traditional sources of financing that they were accustomed to.
E)   increasingly easy to sell stock for the first time to the general public.

Question 8

A marketplace where member brokers meet to buy and sell securities is known as

Accepted Answer

A)   the primary market.
B)   the supplemental market.
C)   the overseas market.
D)   an IPO.
E)   a securities exchange.

Question 9

When a small-business owner applies for a loan, the bank officer will

Accepted Answer

A)   turn the loan down unless the firm doesn't need the money.
B)   check to see if the firm has issued corporate stocks or bonds.
C)   reject the loan if the firm has any outstanding debts.
D)   ask the business owner to fill out a loan application.
E)   approve the loan if the firm has never borrowed money from a competing bank.

Question 10

McGines, Inc.
Sam McGines, CEO of McGines, Inc., decided that upon his retirement, he would elect his son Derrick to become the new CEO.Sam thought it would be a good idea to have Derrick shadow him at work to understand the roles and responsibilities of a CEO.Derrick shadowed his father for months in order to learn every aspect of the business.Sam knew that the best way for Derrick to learn was to actually perform some of the tasks he did on a daily basis, rather than simply describe them.The company generally focused on short-term financing, and Sam felt that it was important for Derrick to understand the different types of financing.Derrick learned about the type of bonds that the company usually offered to raise capital.These bonds allow the purchasers of the bond to keep them until maturity.Derrick also learned the process of obtaining bonds and the various types of long-term financing methods.Job shadowing was indeed a worthwhile experience for Derrick.
-Refer to McGines, Inc.If Derrick were to offer advice to a client about obtaining a loan, which of the following would be the first step?

Accepted Answer

A)   Get to know potential lenders before requesting debt financing.
B)   Have the financial manager meet with the loan officer.
C)   Fill out a loan application.
D)   Show current business plan.
E)   Have your CPA prepare financial statements.

Question 11

Private placements are used to sell stock to individual investors.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not an advantage that promissory notes have over trade credit from the perspective of the seller?

Accepted Answer

A)   Notes are legally binding agreements.
B)   Most notes earn interest for the seller.
C)   Notes are negotiable instruments.
D)   The company extending credit can sell the note and receive the money quickly.
E)   The seller may demand payment from the buyer at any time.

Question 13

It is not unusual for companies to issue ____ type(s)  of ordinary share and ____ type(s)  of preferred stock.

Accepted Answer

A)   one; one
B)   two; one
C)   one; many
D)   many; one
E)   zero; several

Question 14

Bonds that are backed only by the reputation of the issuing corporation are known as

Accepted Answer

A)   mortgage bonds.
B)   registered bonds.
C)   debenture bonds.
D)   bond indentures.
E)   serial bonds.

Question 15

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Accepted Answer

A)   Long-term loans
B)   Corporate bonds
C)   Debenture bonds
D)   Ordinary share
E)   Trade credit

Question 16

When compared to ordinary shareholders, preferred stockholders have a priority claim on corporate assets.

Accepted Answer

A) True 
 B)False

Question 17

Use of a warehouse receipt in short-term financing indicates that

Accepted Answer

A)   a loan has been secured by inventory.
B)   a loan has been obtained to purchase raw materials.
C)   a shipper or freight company has bought merchandise from a company.
D)   fur coats are being stored in a retail location.
E)   the lender is taking precautions because the loan is unsecured.

Question 18

In order to repay some corporate bonds, a firm may be required to deposit a specified sum of money each year until the bond's maturity in a sinking fund.

Accepted Answer

A) True 
 B)False

Question 19

With regard to the ongoing expense of long-term corporate financing, which of the following would be the most expensive?

Accepted Answer

A)   Long-term loans
B)   Corporate bonds
C)   Debenture bonds
D)   Ordinary share
E)   Trade credit

Question 20

Most mature corporations distribute ____ of their after-tax profits as dividends to stockholders.

Accepted Answer

A)   None
B)   10 to 25 percent
C)   40 to 60 percent
D)   70 to 80 percent
E)   All

Exam 18: Financial Management

During the recent economic crisis, the number of business bankruptcies actually declined..

Correct Answer
verified

Which of the following is not an advantage that promissory notes have over trade credit from the perspective of the seller?

Correct Answer
verified

Private placements are used to sell stock to individual investors.

Correct Answer
verified

When compared to ordinary shareholders, preferred stockholders have a priority claim on corporate assets.

Correct Answer
verified

Rosemary Wyatt bought preferred stock issued by General Products, Inc.The stock has a par value of €100 and pays 7 percent.The dividend for this preferred stock issue is

Correct Answer
verified

The highest cost of short-term finance generally is

Correct Answer
verified

Correct Answer
verified

It is not unusual for companies to issue type(s) of ordinary share and type(s) of preferred stock.

Correct Answer
verified

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Correct Answer
verified

When a small-business owner applies for a loan, the bank officer will

Correct Answer
verified

During the recent economic crisis, many companies found that it was

Correct Answer
verified

In order to repay some corporate bonds, a firm may be required to deposit a specified sum of money each year until the bond's maturity in a sinking fund.

Correct Answer
verified

A venture capital firm

Correct Answer
verified

With regard to the ongoing expense of long-term corporate financing, which of the following would be the most expensive?

Correct Answer
verified

The lowest rate of interest charged by a bank for a short-term loan is known as

Correct Answer
verified

Use of a warehouse receipt in short-term financing indicates that

Correct Answer
verified

Bonds that are backed only by the reputation of the issuing corporation are known as

Correct Answer
verified

Most mature corporations distribute ____ of their after-tax profits as dividends to stockholders.

Correct Answer
verified

The NYSE, along with other NYSE Euronext exchanges, lists over 8,500 different issues.

Correct Answer
verified

A marketplace where member brokers meet to buy and sell securities is known as

Correct Answer
verified

Exam 18: Financial Management

During the recent economic crisis, the number of business bankruptcies actually declined..

Correct AnswerverifiedShow Answer

Which of the following is not an advantage that promissory notes have over trade credit from the perspective of the seller?

Correct AnswerverifiedShow Answer

Private placements are used to sell stock to individual investors.

Correct AnswerverifiedShow Answer

When compared to ordinary shareholders, preferred stockholders have a priority claim on corporate assets.

Correct AnswerverifiedShow Answer

Rosemary Wyatt bought preferred stock issued by General Products, Inc.The stock has a par value of €100 and pays 7 percent.The dividend for this preferred stock issue is

Correct AnswerverifiedShow Answer

The highest cost of short-term finance generally is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

It is not unusual for companies to issue ____ type(s) of ordinary share and ____ type(s) of preferred stock.

Correct AnswerverifiedShow Answer

With regard to the ongoing expense of long-term corporate financing, which of the following would be the least expensive?

Correct AnswerverifiedShow Answer

When a small-business owner applies for a loan, the bank officer will

Correct AnswerverifiedShow Answer

During the recent economic crisis, many companies found that it was

Correct AnswerverifiedShow Answer

In order to repay some corporate bonds, a firm may be required to deposit a specified sum of money each year until the bond's maturity in a sinking fund.

Correct AnswerverifiedShow Answer

A venture capital firm

Correct AnswerverifiedShow Answer

With regard to the ongoing expense of long-term corporate financing, which of the following would be the most expensive?

Correct AnswerverifiedShow Answer

The lowest rate of interest charged by a bank for a short-term loan is known as

Correct AnswerverifiedShow Answer

Use of a warehouse receipt in short-term financing indicates that

Correct AnswerverifiedShow Answer

Bonds that are backed only by the reputation of the issuing corporation are known as

Correct AnswerverifiedShow Answer

Most mature corporations distribute ____ of their after-tax profits as dividends to stockholders.

Correct AnswerverifiedShow Answer

The NYSE, along with other NYSE Euronext exchanges, lists over 8,500 different issues.

Correct AnswerverifiedShow Answer

A marketplace where member brokers meet to buy and sell securities is known as

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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verified

Correct Answer
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Correct Answer
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verified

It is not unusual for companies to issue type(s) of ordinary share and type(s) of preferred stock.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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