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Exam 16: Mastering Financial Management

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Question 51

True/False

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

A) True
B) False

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Question 52

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

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Speculative production refers to the tim...

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Question 53

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Which of the following statements is true?

Rex Beauty Supply has ordered $5,000 worth of merchandise from Carrie's Beauty Supply,Inc.The invoice to Rex has discount terms of 2/10,net/30.Rex writes a check within ten days for

A firm that specializes in buying other firms' accounts receivable is called a(n)

Mildred purchased a new dining room table and china cabinet from Discount Furniture,which offered a one-year special with no interest or financing charges.When Mildred makes her purchase,Discount Furniture checks her credit and seeks approval for her.Upon approval,Mildred receives information informing her that she will make payments to Regional Finance Company.This arrangement is an example of

Explain the primary differences between the primary market and the secondary market.Is an IPO most related to the primary market or the secondary market? Explain.

What is a trustee and why type of financing is a trustee associated with?

Effective financial management involves careful planning to determine the best financial sources and to ensure that projected uses are in keeping with the organization's goals.

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

Over the years,Leopard Productions has been slow making payments to its bank.Now it is in need of financing.Based on past experience,the interest rate Leopard will pay is the

The ____ ratio is based on the principle that a high-risk investment should generate higher financial returns for a business and more conservative decisions often generate lesser returns.

XYZ Company experienced a significant increase in sales as a result of its new promotional campaign.Yesterday,however,it realized that because most of those sales were on credit,it did not have enough money in the bank to pay this month's bills.XYZ can take care of this situation temporarily by

A promissory note is a written pledge by a borrower to pay a certain sum of money to a creditor at a specified future date.

Douglas Whipple Corporation needs $200 million to expand its production and to develop new products.Is has agreed to issue written pledges that it will repay a specified amount of money with interest on a particular day.Because it is uncertain it will have sufficient funds available if all of the pledges should become due on the same day,none of the pledges will be paid during the first 15 years.After 15 years,10 percent of the pledges will mature each year until all of them are retired at the end of the 25th year.What are the pledges?

To be successful while pursuing a career in finance,an employee must

Zero-base budgeting is a budgeting approach in which every expense must be justified in every budget.

The quality of a firm's accounts receivables is the credit standing of the firm's customers,coupled with the customers' ability to repay their credit obligations.

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

Nick's Wholesale Office Supplies prefers to handle its accounts receivable itself,but it also needs to use them to facilitate short-term borrowing.What can Nick's do?