1. The finance required by a company to fund its day-to-day operations is called

A. daily financing

B. operational financing

C. operational capital

D. working capital

2. Which of the following statements about financial risk is incorrect?

A. A rise in interest rates will adversely affect the cost of a corporations variable debt.

B. If a corporation imports goods from overseas then an appreciation in the exchange rate will adversely affect the companys profits.

C. If a company(A) has sold goods to another company(B) with payment due in 30 days but company B has gone into liquidation then company A faces credit default.

D. If a company breaches its debt to equity ratio loan covenants the value of the company may be adversely affected

3. Which of the following statements about financial risk is incorrect?

A. The higher the debt to equity ratio, the higher the degree of financial risk.

B. Interest payments on debt must be paid when they fall due

C. When a business fails equity holders rank ahead of providers of debt due to their higher financial risk

D. The higher the proportion of debt the higher the potential return on shareholders funds

4. Ordinary shares in limited liability companies are the major source of external equity funding for Australian companies. Which of the following statements regarding the issuance of ordinary shares by a newly listed limited liability company is incorrect?

A. Shares may be issued on a fully paid or partly paid basis.

B. A holder of installment receipts only has to pay the remaining amount when due or called

C. Share price is determined with reference to a range of variable factors

D. No liability company can issue shares only on a fully paid basis because of the risk

5. A no liability company may also offer shareholders an option to sell shares back to the company if the company expiration is not successful

A. True B. False

6. A right that can only be exercised by the shareholder and not sold is called a:

A. non sale able right

B. renounceable right

C. non-renounceable right

D. pro-rata right