1.

Commercial paper is issued by

	a.	large firms with excellent credit ratings
	b.	all firms
	c.	the federal government
	d.	small firms with excellent credit ratings

2.

A financial lease is similar to an operating lease, since

	a.	the lease payment is not tax deductible
	b.	in both cases the lessee has the use of the asset
	c.	the lessee owns the asset
	d.	in both cases the lease has a maintenance contract

3.

The matching principle suggests that

1.	equipment should be financed with long-term sources
2.	current assets may be financed with short-term sources
3.	plant should not be financed with short-term sources

	a.	1, 2, and 3
	b.	2 and 3
	c.	1 and 3
	d.	1 and 2

4.

The yield on a Treasury bill will increase if

	a.	the length of time to maturity decreases
	b.	bond prices rise
	c.	the premium over its face amount increases
	d.	the discount increases

5.

The optimal economic order quantity depend on

1.	the cost of carrying inventory
2.	the cost of placing an order
3.	the volume of sales

	a.	1 and 2
	b.	2 and 3
	c.	1, 2, and 3
	d.	1 and 3

6.

Which of the following increases net working capital?

	a.	an increase in cash and a decrease in accounts receivable
	b.	an increase in plant financed by issuing bonds
	c.	an increase in preferred stock and a decrease in accounts payable
	d.	an increase in bonds and a decrease in equity

7.

Credit policy requires

1.	establishing the terms of credit
2.	determining to the amount of any discount
3.	determining the collection policy

	a.	1 and 3
	b.	1 and 2
	c.	1, 2, and 3
	d.	2 and 3

8.

If a firm has excess cash that will be needed for a required payment after six months, these funds should not be invested in

	a.	commercial paper
	b.	bankers' acceptances
	c.	corporate bonds
	d.	tax anticipation notes

9.

Which of the following may not be used to secure a short-term loan?

	a.	equipment
	b.	inventory
	c.	accounts receivable
	d.	retained earnings

10.

Term notes sold to the general public

	a.	generally have collateral (i.e., are secured)
	b.	are usually for twenty years
	c.	have variable interest rates
	d.	are generally non-callable

11.

The prime rate is

1.	the rate banks charge their customers
2.	the rate banks charge their best customers
3.	generally less than the rate on Treasury bills
4.	generally greater than the rate on Treasury bills

	a.	2 and 3
	b.	1 and 3
	c.	2 and 4
	d.	1 and 4

12.

Excess cash may be invested in short-term money market securities such as

1.	commercial paper
2.	corporate stock
3.	Treasury bills

	a.	1 and 2
	b.	1 and 3
	c.	1, 2, and 3
	d.	2 and 3

13.

The lower the rate of interest, the smaller is

	a.	the economic order quantity
	b.	the cost of carrying inventory
	c.	the safety stock
	d.	the number of units sold

14.

More lenient terms of credit will probably decrease

	a.	risk
	b.	inventory turnover
	c.	sales
	d.	receivables turnover

15.

If a firm has excess cash that it will need after a period of four months, the financial manager may acquire

1.	negotiable certificates of deposit
2.	Treasury bills
3.	commercial paper

	a.	1, 2, and 3
	b.	1 and 2
	c.	1 and 3
	d.	2 and 3

I will reward all of my points to the person who can qickly BEST answer all 15 questions.