Question 1

Commercial paper usually is issued

Accepted Answer

A)  for 3 to 7 years.
B)  for short-term financing by large corporations.
C)  for short-term financing by small businesses.
D)  by large corporations unable to get credit elsewhere.
E)  by savings and loan associations.F) None of the above
G) A) and B)

Question 2

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.

Accepted Answer

A)  factoring
B)  a promissory note
C)  commercial paper
D)  trade credit
E)  a secured loanF) A) and B)
G) A) and E)

Question 3

Baxter Equipment earned $300,000 last year. Its owners' equity totaled $2,500,000. Based on these amounts, what is the firm's return on owners' equity?

Accepted Answer

A)  1.2 percent
B)  8.33 percent
C)  12 percent
D)  122 percent
E)  It is impossible to calculate the return on owners' equity with this information.F) B) and E)
G) D) and E)

Question 4

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

Accepted Answer

A)  accountant.
B)  financial manager.
C)  financial planner.
D)  investment advisor.
E)  loan officer.F) B) and D)
G) D) and E)

Question 5

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

Accepted Answer

A)  land.
B)  equipment.
C)  buildings.
D)  inventory.
E)  machinery.F) A) and E)
G) A) and C)

Question 6

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

Accepted Answer

A)  serial bond issue.
B)  sinking fund.
C)  trustee plan.
D)  savings plan.
E)  debenture bond issue.F) B) and C)
G) A) and D)

Question 7

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) A) and D)
G) C) and E)

Question 8

The board of directors of a corporation usually is elected by

Accepted Answer

A)  bondholders.
B)  preferred stockholders.
C)  the corporation's board of directors.
D)  convertible preferred stockholders.
E)  common stockholders.F) B) and E)
G) B) and C)

Question 9

All of the following are uses of long-term financing except

Accepted Answer

A)  beginning a new business.
B)  eliminating immediate cash-flow problems.
C)  executing mergers and expansions.
D)  developing and marketing new products.
E)  replacing obsolete equipment.F) A) and E)
G) C) and E)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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,

Accepted Answer

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) All of the above
G) A) and D)

Question 12

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 C)
G) A) and E)

Question 13

The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

Accepted Answer

A) True 
 B)False

Question 14

To raise capital, Financial Fusion sold

Accepted Answer

A)  stock to family members and friends.
B)  stock to stockholders by using an IPO.
C)  bonds to a few close associates.
D)  commercial paper certificates to clients.
E)  promissory notes to a few trustworthy investors.F) A) and B)
G) A) and C)

Question 15

Each year Caliente, Inc., follows a budgeting process. The first step is always to look at the previous year's budget and see if anything needs to be updated. Caliente uses ____ budgeting.

Accepted Answer

A)  cash
B)  traditional
C)  capital
D)  zero-base
E)  historicalF) B) and E)
G) A) and B)

Question 16

​Barrett, the president of Barrett, Inc., has executed a ____. The terms of the Barrett, Inc. promissory note require the corporation to repay the loan in monthly installments.

Accepted Answer

A)  ​term-loan agreement​
B)  ​trade loan agreement
C)  ​business financing agreement
D)  ​equity noteE) All of the above
F) A) and D)

Question 17

Debbie Brooks purchased a $1,000 corporate bond that pays 9 percent interest. The face value of her bond is $1,000. What is the amount of interest that she will receive each year?

Accepted Answer

A)  $100
B)  $90
C)  $50
D)  $46.25
E)  $10F) C) and D)
G) B) and C)

Question 18

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 B)
G) A) and C)

Question 19

A factor will buy accounts receivable for

Accepted Answer

A)  more than their face value.
B)  less than their face value.
C)  their present value.
D)  their par value.
E)  the interest that can be collected from them.F) None of the above
G) A) and C)

Question 20

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

Accepted Answer

Speculative production refers to the tim...

Exam 16: Mastering Financial Management

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

Correct Answer
verified

Debbie Brooks purchased a $1,000 corporate bond that pays 9 percent interest. The face value of her bond is $1,000. What is the amount of interest that she will receive each year?

Correct Answer
verified

To raise capital, Financial Fusion sold

Correct Answer
verified

Venture capital firms invest in

Correct Answer
verified

All of the following are uses of long-term financing except

Correct Answer
verified

Baxter Equipment earned $300,000 last year. Its owners' equity totaled $2,500,000. Based on these amounts, what is the firm's return on owners' equity?

Correct Answer
verified

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

Correct Answer
verified

The board of directors of a corporation usually is elected by

Correct Answer
verified

Barrett, the president of Barrett, Inc., has executed a ____. The terms of the Barrett, Inc. promissory note require the corporation to repay the loan in monthly installments.

Correct Answer
verified

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,

Correct Answer
verified

Correct Answer
verified

Commercial paper usually is issued

Correct Answer
verified

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

Correct Answer
verified

The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Each year Caliente, Inc., follows a budgeting process. The first step is always to look at the previous year's budget and see if anything needs to be updated. Caliente uses ____ budgeting.

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 factor will buy accounts receivable for

Correct Answer
verified

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

Correct Answer
verified
Speculative production refers to the tim...
View Answer

Exam 16: Mastering Financial Management

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

Correct AnswerverifiedShow Answer

Debbie Brooks purchased a $1,000 corporate bond that pays 9 percent interest. The face value of her bond is $1,000. What is the amount of interest that she will receive each year?

Correct AnswerverifiedShow Answer

To raise capital, Financial Fusion sold

Correct AnswerverifiedShow Answer

Venture capital firms invest in

Correct AnswerverifiedShow Answer

All of the following are uses of long-term financing except

Correct AnswerverifiedShow Answer

Baxter Equipment earned $300,000 last year. Its owners' equity totaled $2,500,000. Based on these amounts, what is the firm's return on owners' equity?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The board of directors of a corporation usually is elected by

Correct AnswerverifiedShow Answer

​Barrett, the president of Barrett, Inc., has executed a ____. The terms of the Barrett, Inc. promissory note require the corporation to repay the loan in monthly installments.

Correct AnswerverifiedShow Answer

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,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Commercial paper usually is issued

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Each year Caliente, Inc., follows a budgeting process. The first step is always to look at the previous year's budget and see if anything needs to be updated. Caliente uses ____ budgeting.

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 factor will buy accounts receivable for

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedSpeculative production refers to the tim...View AnswerShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Barrett, the president of Barrett, Inc., has executed a ____. The terms of the Barrett, Inc. promissory note require the corporation to repay the loan in monthly installments.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Speculative production refers to the tim...
View Answer