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Exam 16: Mastering Financial Management

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Question 21

Multiple Choice

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The usual repayment period for long-term business loans is

A) before the end of the first year.
B) at the end of the first year.
C) in two to three years.
D) in three to seven years.
E) at the end of ten years.

F) A) and B)
G) C) and D)

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Question 22

Multiple Choice

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Pat starts a business called ValueCentral.com,the concept takes off,and the company has an IPO and goes public.The company is growing very rapidly and trying to keep up with customer demand.What type of dividend is this company likely to pay its stockholders?

A) A large dividend due to high earnings
B) An average size dividend
C) Very small or no dividend
D) All profits to be paid as dividends
E) As no stock is involved,dividends irrelevant

F) A) and D)
G) A) and E)

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Question 23

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During a recent officer's meeting of Medium Corporation,Inc.,a company that has been in operation for three years,the officers determined that they needed to develop a multi-year plan for financial needs.The officers discussed the new machinery and equipment they would need to handle the growth in operations and replace obsolete equipment,whether they should move the company to a bigger facility or expand the current one,and new products that the company was developing.After lengthy discussion on the matter,they decided that they would expand the current facilities.They assigned the finance officer the task of writing a report translating the plan outlines into hard numbers.What type of report was the finance officer directed to prepare?

When a firm makes annual deposits to repay bondholders at maturity,it is using a

Julia just received her paycheck and stopped at the bank on the way home from her job to make a deposit.While eating dinner she read the ads in the local newspaper and realized she needed new clothes for school and work.She picked out several garments from the Kohl's ad that she liked and,after eating,went to Kohl's to purchase the clothing.She tried on several outfits then settled on two pairs of pants,a skirt,and two blouses.She took the clothing to the cash register and stood in line with other shoppers.When it was her turn to purchase the clothing,she gave the cashier a card that electronically subtracted the amount of her purchase from her account at the moment the purchase was made.What kind of transaction did she participate in?

Rollins,Inc. Mat Rollins,CEO of Rollins,Inc.,decided that upon his retirement,he would elect his son Chris to become the new CEO.Mat thought it would be a good idea to have Chris shadow him at work to understand the roles and responsibilities of a CEO.Chris shadowed his father for months in order to learn every aspect of the business.Mat knew that the best way for Chris 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 Mat felt that it was important for Chris to understand the different types of financing.Chris 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.Chris also learned the process of obtaining bonds and the various types of long-term financing methods.Job shadowing was indeed a worthwhile experience for Chris. -Refer to Rollins,Inc.If Chris were to offer advice to a client about obtaining a loan,which of the following would be the first step?

In regards to cash flow,a firm should ideally have

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

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

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

The representative for bond owners is called a(n)

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

Petes Manufacturing is hesitant to extend trade credit to Ramon Drake.Instead,Ramon agrees to sign a promissory note.Petes prefers this note because

The most basic form of corporate ownership is common stock.

Rollins,Inc. Mat Rollins,CEO of Rollins,Inc.,decided that upon his retirement,he would elect his son Chris to become the new CEO.Mat thought it would be a good idea to have Chris shadow him at work to understand the roles and responsibilities of a CEO.Chris shadowed his father for months in order to learn every aspect of the business.Mat knew that the best way for Chris 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 Mat felt that it was important for Chris to understand the different types of financing.Chris 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.Chris also learned the process of obtaining bonds and the various types of long-term financing methods.Job shadowing was indeed a worthwhile experience for Chris. -Refer to Rollins,Inc.If Chris has learned and understood the business,he should know that today most corporate bonds are

A promissory note that requires a borrower to repay funds in installments is called a(n)

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

Debt capital is borrowed money that does not have to be repaid.

At Furman Company,managers go through a lengthy budgeting process wherein each department manager is required to provide documentation justifying every expected expense.Furman uses ____ budgeting.