31.Which statement about a junk bond is incorrect?

	a.	These bonds are issued by smaller companies with a high risk of default
	b.	These bonds pay less interest than the higher rated bonds
	c.	There is a high chance that the issuing company would not be able to make the ongoing interest payments or pay back the principal
	d.	Usually, investors with a high-risk tolerance invest in junk bonds

32.If I need to figure out from where a business got the money it needed (e.g., Target) to purchase all its assets listed on its balance sheet, I should first look at:

Target's net income on the income statement

Target's liabilities and equity on the balance sheet

Target's cost of goods sold on the income statement

Target's financing activities on the statement of cash flow

34.To whom do internal auditors report?

shareholders

accounting managers

the SEC

top management and the audit committee of the board of directors

37.If I seek to understand the sources of the financing for Target's assets, I should look at:

Target's net income on the income statement

Target's liabilities and equity on the balance sheet

Target's cost of goods sold on the income statement

Target's investing activities on the statement of cash flow

38.Which document is generally considered the measure of a company's economic performance?

balance sheet

none of these answers

income statement

statement of cash flows

39.What is the SEC's mission statement?

to establish auditing and related professional practice standards for registered public accounting firms

to provide useful information to investors and other users of financial reports

to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation

to create the conditions for economic growth and opportunity

40.The relation between the cash flow from operating activities and the cash flow from investing activities is known as _____.

	a.	financing cash flow
	b.	net cash flow
	c.	cash flow ratio
	d.	free cash flow

42.Multiple answer question

Which statements about bonds are incorrect? Choose all that apply.

	a.	A bond is an evidence that the bondholder owns a share of a corporation.
	b.	With bonds, the issuing corporation has a legal obligation to make interest payments.
	c.	With bonds, the issuing corporation has no legal obligation to pay back the original investment amount to the investor.
	d.	Bondholders (bond investors) have priority over stockholders in extracting the remaining assets of a bankrupt corporation.

43.Shelly is a loan officer who approves loans for small businesses. One factor she looks at carefully when making loan decisions is the amount of outstanding debt the firm already has. She can find this information by looking at the firms:

	a.	income statement.
	b.	cash budget.
	c.	articles of incorporation.
	d.	balance sheet.

45.Which feature of the stock market makes people more likely to invest in a corporation?

If someone no longer wants to be an owner of the corporation, the shares can be sold.

Shares of every corporation in the United States can be purchased on the New York Stock Exchange.

People enjoy gambling, and the markets provide them with a place to gamble.

Physical stock markets are the only place stocks can be purchased and traded.

46.If you buy a companys bond _______________ .

	a.	You own a part of the company
	b.	You have lent money to the company
	c.	You are liable for the companys debts
	d.	You can vote on shareholder resolutions

47.Based on the Cash Flow Statement above, what is the Free Cash Flow for Company C?

	a.	$45,000
	b.	- (minus) $55,000
	c.	$70,000
	d.	$15,000