Question1

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is not one of the three main areas of financial management?

Select one:

a.Stock markets

b.Investments

c.Money

d.Capital markets

Question2

Not yet answered

Points out of 1.00

Flag question

Question text

Which type of investment allows investors to potentially have voting and profit-sharing privileges in the company for a nominal investment of shares?

Select one:

a.Equity

b.Debt

c.Direct

d.Long-term

Question3

Not yet answered

Points out of 1.00

Flag question

Question text

Companies use __________ to gain funds for expansion and growth.

Select one:

a.thought leadership

b.speculation

c.investment

d.debt

Question4

Not yet answered

Points out of 1.00

Flag question

Question text

Financial institutions use __________ to facilitate the exchange of money for securities.

Select one:

a.loans

b.exchanges

c.risks

d.transfers

Question5

Not yet answered

Points out of 1.00

Flag question

Question text

Bob is reviewing his company's revenue and expenditures over the past 3 years. To do this , Bob needs to obtain copies of which financial statement?

Select one:

a.Balance sheet

b.Statement of cash flows

c.Statement of revenues and expenses

d.Income statement

Question6

Not yet answered

Points out of 1.00

Flag question

Question text

How do financial managers tend to value all assets in the same terms?

Select one:

a.By evaluating cash flows

b.By qualifying cash flows

c.By interpreting cash flows

d.By estimating cash flows

Question7

Not yet answered

Points out of 1.00

Flag question

Question text

Bob is evaluating a bond issue to determine the right price for the bond. In his evaluation, he gathers the following information:

N = 8 years

INT = .025 or 2.5%

PMT = $25

FV = $1,000 (par value)

What is the above bond issue worth in today's dollars?

Select one:

a.$1,000

b.$1,181.63

c.$1,200.50

d.None of the above

Question8

Not yet answered

Points out of 1.00

Flag question

Question text

What is the term for trying to mitigate the risk associated with an investment or situation?

Select one:

a.Tolerance

b.Avoidance

c.Antecedence

d.All of the above

Question9

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is a key component of discounted cash flows?

Select one:

a.Periods that the cash flows would affect

b.Annuity due amounts

c.Payment terms

d.Principle amounts

Question10

Not yet answered

Points out of 1.00

Flag question

Question text

In which two ways can risk be defined?

Select one:

a.Total and market risk

b.Mitigated and unmitigated risk

c.Risky and very risky

d.None of the above

Question11

Not yet answered

Points out of 1.00

Flag question

Question text

A company has a capital structure that includes 30 debts, 10 preferred stock, and 60% common stock. The before-tax cost of debt is 11%. The cost of preferred stock is 10.3%. The cost of common stock is 14.7%. New common stock sales cost approximately 16%. The marginal tax rate is 40%.

According to the above information, what is the weighted average cost of capital for this company?

Select one:

a.10.3%

b.11%

c.11.8%

d.None of the above

Question12

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is most useful for evaluating an investment?

Select one:

a.Net future value

b.Internal rate of return

c.Neither A nor B

d.Either A or B

Question13

Not yet answered

Points out of 1.00

Flag question

Question text

What is the first step of evaluating a project's cash flows?

Select one:

a.Evaluate whether to do the project.

b.Break down the project's key elements.

c.Determine the project's needs.

d.Evaluate all the cash flows.

Question14

Not yet answered

Points out of 1.00

Flag question

Question text

What measure should financial managers use when they do not know the internal rate of return?

Select one:

a.Net future value

b.Internal rate of return

c.Net present value

d.External rate of return

Question15

Not yet answered

Points out of 1.00

Flag question

Question text

What does the cost of debt represent?

Select one:

a.The cost of carrying debt

b.The after-tax cost of borrowing

c.The cost of financing

d.None of the above

Question16

Not yet answered

Points out of 1.00

Flag question

Question text

A company is evaluating its options for filing bankruptcy and needs to determine the total costs it would incur as a result of being in distress. Below is a summary of the information for this scenario:

Filing fees equal $100.

Creditor-revised terms would increase the financing costs of the company by 2% upward on the existing $1,000 floating credit facility annually.

Expected loss in customer sales equals $30 annually.

What is the company's total cost to choose bankruptcy?

Select one:

a.$100 annually

b.$150 annually

c.$300 annually

d.$500 annually

Question17

Not yet answered

Points out of 1.00

Flag question

Question text

A company has total revenue of $195,000 and total assets on its balance sheet of $2,015,000. What is the return on assets for this company?

Select one:

a.10%

b.12%

c.15%

d.None of the above

Question18

Not yet answered

Points out of 1.00

Flag question

Question text

What do stock splits often increase?

Select one:

a.The price of shares

b.The number of shares

c.The cost of shares

d.The value of shares

Question19

Not yet answered

Points out of 1.00

Flag question

Question text

Which form of payment causes a company to pay taxes twice on the same amount?

Select one:

a.Dividends

b.Interest

c.Stock splits

d.Net present value

Question20

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is not an assumption in capital structure theory?

Select one:

a.Potential investors carry the same assumptions about a company's risks.

b.Companies can measure business risk.

c.Investors trade stocks and bonds in perfect capital markets.

d.All the above are assumptions in capital structure theory.

Question21

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following represents the right blend of capital debt and equity for companies?

Select one:

a.Structure

b.Risk

c.Loans

d.Theory

Question22

Not yet answered

Points out of 1.00

Flag question

Question text

What is the first step in a long-term financial plan?

Select one:

a.Establish financial statements.

b.Estimate the sales.

c.Evaluate the monitoring process.

d.Reinvest the company's funds.

Question23

Not yet answered

Points out of 1.00

Flag question

Question text

What does corporate scope define?

Select one:

a.The company's line of business

b.The company's objectives

c.The company's approach to profit

d.None of the above

Question24

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following defines inventory conversion?

Select one:

a.The time frame between when companies generate a payable and when they ultimately pay the bill to their suppliers

b.The time needed to convert materials into finished goods

c.The time required to convert sales made on account or credit to cash

d.None of the above

Question25

Not yet answered

Points out of 1.00

Flag question

Question text

What is the term for borrowing to cover short-term capital needs?

Select one:

a.Long-term financing

b.Short-term financing

c.Loans

d.Long-term float

Question26

Not yet answered

Points out of 1.00

Flag question

Question text

Sherry is evaluating her company's cash budget for the coming quarter and identifies the following items:

$50 in investing activities

$100 in financing activities

$200 in operating activities

Using your knowledge of cash budgets, what will the total cash outlay likely be for the next quarter?

Select one:

a.$50

b.$200

c.$350

d.$800

Question27

Not yet answered

Points out of 1.00

Flag question

Question text

What does a secured loan require?

Select one:

a.An unsecured form of cash

b.An asset-backed transaction for the loan

c.A transfer of assets

d.An insured loan

Question28

Not yet answered

Points out of 1.00

Flag question

Question text

Company YY offers a 3% yield on all its savings deposits. It then reinvests these amounts by loaning to its customers at 8%. What is the profit margin?

Select one:

a.3%

b.5%

c.8%

d.11%

Question29

Not yet answered

Points out of 1.00

Flag question

Question text

Bob is trying to decide which bank to deposit his checks into and narrows down three options. Which bank would he choose based on the principle of convenience?

Bank A is right next door to his house.

Bank B pays 11% on all deposits.

Bank C is giving away an iPad to new customers.

Select one:

a.Bank A

b.Bank B

c.Bank C

d.All the above represent convenience terms.

Question30

Not yet answered

Points out of 1.00

Flag question

Question text

Christine is trying to take out a loan at her local bank to pay off some bills. The bank loan officer asks her for security on the loan. Which of the items below could Christine use for security?

Select one:

a.Savings

b.Another loan

c.Contract

d.A neighborhood watch

Question31

Not yet answered

Points out of 1.00

Flag question

Question text

What do bonds pay for the use of the principal?

Select one:

a.Interest

b.Risk

c.Stock

d.Dividends

Question32

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is a company's process of converting sales on credit to cash?

Select one:

a.Income management

b.Receivables management

c.Cash management

d.Time management

Question33

Not yet answered

Points out of 1.00

Flag question

Question text

Company Y decides to lease its new equipment rather than purchase it outright. The lease contains the following information:

The lessor must maintain and service the equipment. The lease cannot be amortized, and has no ownership rights. The lease comes with a cancellation clause.

Based on this information, which type of lease did Company Y enter into?

Select one:

a.Financial

b.Sale and leaseback

c.Operating

d.None of the above

Question34

Not yet answered

Points out of 1.00

Flag question

Question text

Investor A is reviewing the different options available on the open market and identifies one that has a strike price of $25. The investor establishes that the underlying asset's value is $45. What is the value of the option?

Select one:

a.$15

b.$20

c.$25

d.$45

Question35

Not yet answered

Points out of 1.00

Flag question

Question text

What is a key disadvantage of going public?

Select one:

a.Flexibility

b.The cost of reporting

c.More funds

d.Access to new capital

Question36

Not yet answered

Points out of 1.00

Flag question

Question text

Which type of bonds includes a security feature?

Select one:

a.Debenture

b.Subordinated bonds

c.Mortgage bonds

d.None of the above

Question37

Not yet answered

Points out of 1.00

Flag question

Question text

Company X is trying to raise additional capital to expand into Europe. In determining the best method of raising capital, the company's management finds that paying dividends is better than paying interest. Given this, which type of investment is best?

Select one:

a.Bonds

b.Line of credit

c.Loans

d.Preferred stock

Question38

Not yet answered

Points out of 1.00

Flag question

Question text

Which type of funding source is very flexible and easy to access because of its short term?

Select one:

a.Term loans

b.Long-term debt

c.Stock

d.Debt

Question39

Not yet answered

Points out of 1.00

Flag question

Question text

Company A and Company B decide to merge their operations; Company B is the acquiring organization. Before completing the merger, they determine that Company A has a total worth of $50 million and Company B has a total worth of $100 million. What would the combined company be worth after the merger?

Select one:

a.$50 million

b.$100 million

c.$150 million

d.$300 million

Question40

Not yet answered

Points out of 1.00

Flag question

Question text

Who establishes the fairness and feasibility of a bankruptcy?

Select one:

a.Courts

b.Investment bankers

c.Loan officers

d.Financial managers

Question41

Not yet answered

Points out of 1.00

Flag question

Question text

The International Monetary Fund sets guidelines for which of the following?

Select one:

a.Trade

b.Loans

c.Risk

d.Exchange

Question42

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is a challenge for multinational operations?

Select one:

a.Political concerns

b.Government regulations

c.Language differences

d.All of the above

Question43

Not yet answered

Points out of 1.00

Flag question

Question text

Which advantage of multinational operations allows companies to expand to other countries when they exhaust growth in their own country?

Select one:

a.Production

b.Diversification

c.New technologies

d.Additional sales and revenues

Question44

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following is not a type of merger?

Select one:

a.Sideways

b.Horizontal

c.Conglomerate

d.Vertical

Question45

Not yet answered

Points out of 1.00

Flag question

Question text

Which of the following does not describe long-term financial plans?

Select one:

a.Plans that span more than one period

b.Near-term financial plans

c.Plans that are longer than 12 months in duration

d.All the above