Question 1

A term-loan agreement requires a borrower to repay the loan

Accepted Answer

A)   in monthly, quarterly, semiannual, or annual installments.
B)   at the end of the second year.
C)   at the end of the third year.
D)   at the end of the fourth year.
E)   at the end of the fifth to seventh year.F) All of the above
G) B) and C)

Question 2

Interest on corporate bonds is paid quarterly.

Accepted Answer

A) True 
 B)False

Question 3

With regard to ongoing expenses, the most expensive type of long-term financing is the sale of ordinary share.

Accepted Answer

A) True 
 B)False

Question 4

Venture capital firms invest in

Accepted Answer

A)   banks and financial firms.
B)   large, successful firms.
C)   small firms that have the potential to be very successful.
D)   neighborhood convenience stores.
E)   chain retail establishments.F) A) and B)
G) A) and C)

Question 5

Tom Jackson, president of Jackson Manufacturing, suspects that the managers of two departments have been padding their budgets for the last three years.To eliminate this problem, Tom would

Accepted Answer

A)   fire the managers.
B)   hire an efficiency expert.
C)   hire a new accountant.
D)   use zero-base budgeting.
E)   use traditional budgeting.F) D) and E)
G) A) and B)

Question 6

One of the most important priorities for someone interested in careers in finance is honesty.

Accepted Answer

A) True 
 B)False

Question 7

The steps in effective financial planning are

Accepted Answer

A)   establishing organisational goals, identifying expenses, and budgeting.
B)   establishing organisational goals, budgeting for financial needs, and identifying sources of financing.
C)   developing a plan of action, monitoring the plan, and evaluating.
D)   identifying sources of financing, budgeting, and evaluating.
E)   None of these answers are correct.F) B) and C)
G) A) and C)

Question 8

Equity capital generally provides the greatest part of a firm's financing.

Accepted Answer

A) True 
 B)False

Question 9

When constructing budgets, most managers begin with departmental budgets for sales and various expenses that are then combined into a company-wide cash budget.

Accepted Answer

A) True 
 B)False

Question 10

Short-term financing is used to start a new business.

Accepted Answer

A) True 
 B)False

Question 11

Burberry Mills sold stock to an insurance company to raise needed financing for expansion and new product development.This type of transaction is referred to as a(n)

Accepted Answer

A)   equity deal.
B)   private placement.
C)   ownership transfer.
D)   debt placement.
E)   small business assistance package.F) C) and E)
G) A) and B)

Question 12

Sara Lee Corporation is a large conglomerate of businesses participating in a variety of industries.A few years ago, Sara Lee was considering the purchase of Bryan Foods.If Bryan Foods represented a tremendous opportunity to make the company more successful, Sara Lee may, as a last resort, have considered

Accepted Answer

A)   seeking short-term financing.
B)   using trade credit to pay for Bryan Foods.
C)   using future sales revenues for the purchase of Bryan Foods..
D)   sharing the idea with competitors as a possible joint venture..
E)   selling assets from another division to pay for Bryan Foods.F) A) and C)
G) A) and B)

Question 13

The costs of selling stock to the general public are referred to as flotation costs.

Accepted Answer

A) True 
 B)False

Question 14

The terms "2/10, net/30" are used with most promissory notes.

Accepted Answer

A) True 
 B)False

Question 15

When a corporation uses an initial public offering to raise capital, the stock is sold in the

Accepted Answer

A)   primary market.
B)   secondary market.
C)   unsecured financing market.
D)   securities exchange.
E)   over-the-counter market.F) A) and C)
G) C) and E)

Question 16

Ms.Thomas has received an invoice from the manufacturer for which she distributes products.The invoice states credit terms of 3/10, net/30.Puzzled by this, she calls on you to explain.You indicate that the notation 3/10 means that

Accepted Answer

A)   she may take a 30 percent discount if she pays the invoice within three days.
B)   she must pay the entire amount in three days.
C)   after three days, she must pay the new amount in ten days.
D)   her line of credit is equivalent to three-tenths of the value of her business.
E)   she may take a 3 percent discount if she pays the invoice within ten days.F) C) and D)
G) A) and B)

Question 17

Melissa feels confident about obtaining short-term financing for her art gallery because, like many companies, she has a(n)

Accepted Answer

A)   unlimited source of financing available to her.
B)   relatively large amount of money she can borrow.
C)   stockpile of cash to use in place of short-term financing.
D)   relationship with the friend of her banker.
E)   close working relationship with a lender.F) A) and E)
G) A) and D)

Question 18

Venture capital is money invested in small firms that have the potential to become very successful.

Accepted Answer

A) True 
 B)False

Question 19

Bonds that are secured by various assets of the issuing corporation are called debenture bonds.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a financial reform regulation proposed by the U.S.House of Representatives and Senate as a reaction to the economic crisis?

Accepted Answer

A)   End taxpayer bailouts.
B)   Tighten access to long-term financing by large corporations.
C)   Tighten regulations for major financial firms.
D)   Increase government oversight.
E)   Make Wall Street firms accountable for their actions.F) A) and E)
G) A) and C)

Exam 18: Financial Management

Tom Jackson, president of Jackson Manufacturing, suspects that the managers of two departments have been padding their budgets for the last three years.To eliminate this problem, Tom would

Correct Answer
verified

Correct Answer
verified

The steps in effective financial planning are

Correct Answer
verified

Bonds that are secured by various assets of the issuing corporation are called debenture bonds.

Correct Answer
verified

Venture capital firms invest in

Correct Answer
verified

Burberry Mills sold stock to an insurance company to raise needed financing for expansion and new product development.This type of transaction is referred to as a(n)

Correct Answer
verified

Ms.Thomas has received an invoice from the manufacturer for which she distributes products.The invoice states credit terms of 3/10, net/30.Puzzled by this, she calls on you to explain.You indicate that the notation 3/10 means that

Correct Answer
verified

When a corporation uses an initial public offering to raise capital, the stock is sold in the

Correct Answer
verified

Short-term financing is used to start a new business.

Correct Answer
verified

Interest on corporate bonds is paid quarterly.

Correct Answer
verified

Melissa feels confident about obtaining short-term financing for her art gallery because, like many companies, she has a(n)

Correct Answer
verified

Venture capital is money invested in small firms that have the potential to become very successful.

Correct Answer
verified

One of the most important priorities for someone interested in careers in finance is honesty.

Correct Answer
verified

Which of the following is not a financial reform regulation proposed by the U.S.House of Representatives and Senate as a reaction to the economic crisis?

Correct Answer
verified

A term-loan agreement requires a borrower to repay the loan

Correct Answer
verified

The costs of selling stock to the general public are referred to as flotation costs.

Correct Answer
verified

When constructing budgets, most managers begin with departmental budgets for sales and various expenses that are then combined into a company-wide cash budget.

Correct Answer
verified

With regard to ongoing expenses, the most expensive type of long-term financing is the sale of ordinary share.

Correct Answer
verified

The terms "2/10, net/30" are used with most promissory notes.

Correct Answer
verified

Equity capital generally provides the greatest part of a firm's financing.

Correct Answer
verified

Exam 18: Financial Management

Tom Jackson, president of Jackson Manufacturing, suspects that the managers of two departments have been padding their budgets for the last three years.To eliminate this problem, Tom would

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The steps in effective financial planning are

Correct AnswerverifiedShow Answer

Bonds that are secured by various assets of the issuing corporation are called debenture bonds.

Correct AnswerverifiedShow Answer

Venture capital firms invest in

Correct AnswerverifiedShow Answer

Burberry Mills sold stock to an insurance company to raise needed financing for expansion and new product development.This type of transaction is referred to as a(n)

Correct AnswerverifiedShow Answer

Ms.Thomas has received an invoice from the manufacturer for which she distributes products.The invoice states credit terms of 3/10, net/30.Puzzled by this, she calls on you to explain.You indicate that the notation 3/10 means that

Correct AnswerverifiedShow Answer

When a corporation uses an initial public offering to raise capital, the stock is sold in the

Correct AnswerverifiedShow Answer

Short-term financing is used to start a new business.

Correct AnswerverifiedShow Answer

Interest on corporate bonds is paid quarterly.

Correct AnswerverifiedShow Answer

Melissa feels confident about obtaining short-term financing for her art gallery because, like many companies, she has a(n)

Correct AnswerverifiedShow Answer

Venture capital is money invested in small firms that have the potential to become very successful.

Correct AnswerverifiedShow Answer

One of the most important priorities for someone interested in careers in finance is honesty.

Correct AnswerverifiedShow Answer

Which of the following is not a financial reform regulation proposed by the U.S.House of Representatives and Senate as a reaction to the economic crisis?

Correct AnswerverifiedShow Answer

A term-loan agreement requires a borrower to repay the loan

Correct AnswerverifiedShow Answer

The costs of selling stock to the general public are referred to as flotation costs.

Correct AnswerverifiedShow Answer

When constructing budgets, most managers begin with departmental budgets for sales and various expenses that are then combined into a company-wide cash budget.

Correct AnswerverifiedShow Answer

With regard to ongoing expenses, the most expensive type of long-term financing is the sale of ordinary share.

Correct AnswerverifiedShow Answer

The terms "2/10, net/30" are used with most promissory notes.

Correct AnswerverifiedShow Answer

Equity capital generally provides the greatest part of a firm's financing.

Correct AnswerverifiedShow Answer

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