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Exam 16: Mastering Financial Management

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Question 21

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The lowest interest rate charged by a bank for a short-term loan is called the discount rate.

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Question 22

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What is the main difference between unsecured short-term financing and secured short-term financing? Which method is better from the viewpoint of the borrower?

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The main difference between unsecured sh...

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Question 23

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Money that will be used for one year or less is called _____.

All of the following except which would be considered appropriate collateral for a long-term loan?

Casey Broadway's responsibility at his company is overseeing all the activities concerned with obtaining money and using it effectively.Casey is a(n) _____.

The board of directors of a corporation usually is elected by

Most firms like lines of credit because the compensating balance requirement frees up their capital to pay short-term debts.

What types of businesses obtain venture capital financing? How does venture capital differ from a private placement?

Marietta Hotels used a twenty-five-year, $50 million bond issue to finance its expansion.In its plan to ensure that funds would be available to redeem the bonds at maturity, it arranged that none of the bonds would mature during the first fifteen years.Therefore, 10 percent of the bonds mature each year until all the bonds are retired at the end of the twenty-fifth year.This is an example of the ____ method of repayment.

What is cash flow? Why is cash flow important to a business?

Kliting Co.is concerned with whether or not it will be able to pay its bills with money coming in from sales.It would be helpful for Kliting to prepare a ____ to better understand its needs.

For a department store such as Macy's, the most likely need for short-term financing will be for _____.

The representative for bond owners is called a(n) _____.

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.From his work experience, Derrick should have learned that ____ has a repayment period of thirty to sixty days.

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

Financial leverage is the use of borrowed funds to increase the return on owners' equity.

William owns 100 shares of Textron convertible preferred stock.To what can this preferred stock be converted in most companies?

A cash budget estimates a firm's expenditures for major assets like replacement of obsolete equipment and mergers and acquisitions.

____ is (are) short-term promissory notes with no collateral that are issued by large corporations.

The most basic form of corporate ownership is common stock.