FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 16: Mastering Financial Management

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

Suppose IBM decided to issue commercial paper in denominations of $5,000 to raise a large sum of money.Since the commercial paper is secured only by IBM's reputation

A) IBM does not have to pay back the principal.
B) IBM has to pay interest rates higher than those charged by commercial banks for short-term loans.
C) no interest is paid.
D) no collateral is involved.
E) the commercial paper can be issued only in $1,500 or $10,000 denominations.

F) B) and C)
G) A) and E)

Correct Answer

verified

Show Answer

Question 52

Essay

Review LaterAdd Note

Review Later

In what situations would you seek short-term financing? In what situations would you seek long-term financing?

Correct Answer

Answered by ExamLex AI

Short-term financing is typically sought...

View Answer

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

Slater Co.has very old computers and manufacturing equipment and knows it needs to upgrade them or risk losing much of its business.Slater does not have the money to purchase the computers, so it will most likely need

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.

If money is reserved each year to guarantee that a bond will be paid off at maturity, the money will be held in a ____ fund.

An investment banking firm typically charges between 15 and 25 percent of the proceeds received by the corporation issuing the securities.

Often high-risk decisions generate larger returns while conservative decisions generate lesser returns.From a financial management standpoint does this make sense? Also, what can a financial manager do to reduce risk while increasing the firm's financial return?

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.At one point, Derrick was not sure about which type of bond was backed only by the reputation of the issuing corporation.Which of the following would you suggest?

Bonds that can be exchanged for a specified number of shares of common stock are called convertible bonds.

Florida-based Swim and Fin Products often experiences a time lag between the time goods are produced and the time that retailers pay for the finished products.In this situation, the Swim and Fin's financial problems are the result of speculative production.

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

Commercial paper is short-term promissory notes issued by large corporations.

The most expensive form of short-term financing is factoring of accounts receivable.

A firm with questionable credit should expect to pay the prime interest rate minus 2 percent.

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 has learned and understood the business, he should know that today most corporate bonds are _____.

Compare the relative costs of using long-term equity financing and of using long-term debt financing.

Beard Auction receives an invoice from one of its European suppliers for antiques.The amount of the invoice is $40,000 with terms of 3/10, net/60.If the invoice is paid on day 20, Beard is entitled to a ____ cash discount and will write the check for ____.

What is speculative production and how does it impact a firm's financial planning?

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?

The least expensive form of short-term financing is _____.