Question 1

_____ are issued by commercial banks and brokerage companies,are available in minimum amounts of $100,000,and may be traded prior to maturity.

Accepted Answer

A)  Trade credits
B)  U.S.Treasury bills
C)  Serial bonds
D)  Commercial loans
E)  Commercial certificates of depositF) A) and E)
G) A) and D)

Question 2

Serial bonds are a sequence of small bond issues of progressively longer maturity.

Accepted Answer

A) True 
 B)False

Question 3

Sprocket and Widget is a garment manufacturing company.Which of the following would be a fixed asset for Sprocket and Widget?

Accepted Answer

A)  U.S.Treasury bills
B)  Temporary workers
C)  $5,000 in Treasury bills
D)  $1000 trade credit
E)  Office furnitureF) D) and E)
G) C) and E)

Question 4

The _____ is the interest rate commercial banks charge their best customers for short-term loans.

Accepted Answer

A)  factor rate
B)  over-the-counter rate
C)  prime rate
D)  credit rate
E)  trade rateF) A) and B)
G) D) and E)

Question 5

Based on qualitative assessments,which of the following potential investment projects is the most risky?

Accepted Answer

A)  Adding to an existing product line
B)  Introducing a new product in a foreign market
C)  Expanding into a new market
D)  Buying new equipment for an established market
E)  Repairing old equipmentF) None of the above
G) C) and D)

Question 6

The over-the-counter securities market:

Accepted Answer

A)  does not trade corporate bonds.
B)  accounts for the least total dollar value of all of the secondary markets.
C)  does not include illiquid bank stocks.
D)  does not have a central location.
E)  is similar to organized stock exchanges.F) A) and B)
G) B) and E)

Question 7

Which of the following is an arrangement by which a bank agrees to lend a specified amount of money to an organization upon request?

Accepted Answer

A)  A trade credit
B)  A floating-rate bond
C)  A junk bond
D)  A lockbox
E)  A line of creditF) B) and E)
G) C) and E)

Question 8

The cash return as a percentage of a stock's price is called its:

Accepted Answer

A)  capital in excess of par value.
B)  dividend yield.
C)  price-earnings ratio.
D)  retained earnings.
E)  par value.F) C) and D)
G) B) and D)

Question 9

If the par value of a stock is $5 and the offering price of the stock is $2,the capital in excess of par is:

Accepted Answer

A)  $10.00.
B)  $3.50.
C)  $7.00.
D)  $2.00.
E)  $3.00.F) All of the above
G) C) and E)

Question 10

Working capital management refers to _____.

Accepted Answer

A)  managing long-term liabilities
B)  managing long-term assets
C)  managing short-term assets and liabilities
D)  financing internal projects
E)  financing small business enterprisesF) A) and B)
G) A) and C) C

Question 11

_____ is a written promise from one company to another to pay a certain amount of money.

Accepted Answer

A)  Commercial paper
B)  U.S.Treasury bill
C)  Certificate of deposit
D)  Secured bond
E)  Trade creditF) A) and E)
G) D) and E)

Question 12

Which of the following is money owed to a business by credit customers?

Accepted Answer

A)  Accounts receivable
B)  Accounts payable
C)  Trade credit
D)  U.S.Treasury bill
E)  Secured bondF) B) and E)
G) None of the above A

Question 13

Which of the following statements is true of contrarian stock market investors?

Accepted Answer

A)  They perform better by keeping an eye on short-term fluctuations.
B)  They ignore the long-term trend line while investing.
C)  They invest when the number of investors in a market are high.
D)  They invest when the prices of stocks are low.
E)  They invest more when the market is very stable.F) A) and B)
G) B) and D)

Question 14

Long-term assets are also called _____ assets.

Accepted Answer

A)  current
B)  floating
C)  unsecured
D)  fixed
E)  junkF) C) and D)
G) B) and C) D

Question 15

A boat manufacturer orders 50 units of fiberglass material and promises to pay the supplier at a later date.The boat manufacturer will record the amount to be paid as:

Accepted Answer

A)  a secured loan.
B)  accounts receivable.
C)  a serial bond.
D)  accounts payable.
E)  a Treasury bill.F) All of the above
G) A) and E)

Question 16

Factors such as a bond's face value,maturity date,and interest rate are specified in the:

Accepted Answer

A)  indenture.
B)  interest prospectus.
C)  equity contract.
D)  commercial paper.
E)  lockbox portfolio.F) C) and D)
G) D) and E)

Question 17

Which of the following statements is true of bonds?

Accepted Answer

A)  They must be repaid according to the terms set in the indenture.
B)  They can be defaulted without penalty.
C)  They are the same as preferred stock.
D)  They typically represent the fixed assets of a firm.
E)  They denote a firm's current liabilities.F) None of the above
G) All of the above

Question 18

AMZ Inc.,a company that deals with bikes,has its own manufacturing unit.The equipment used in the manufacturing unit of the company is an example of a:

Accepted Answer

A)  current asset.
B)  fixed asset.
C)  junk bond.
D)  short-term asset.
E)  floating-rate bond.F) A) and B)
G) B) and E)

Question 19

Which of the following statements is true of junk bonds?

Accepted Answer

A)  They are short-term liabilities.
B)  They are a sequence of small bond issues of progressively longer maturity.
C)  They have low inherent risks.
D)  They are typically associated with companies in good financial health.
E)  They offer relatively high rates of interest.F) All of the above
G) C) and E)

Question 20

The markets where firms raise financial capital are known as _____.

Accepted Answer

A)  primary markets
B)  secondary markets
C)  futures markets
D)  over-the-counter markets
E)  currency marketsF) B) and D)
G) A) and E)

Exam 16: Financial Management and Securities Markets

_____ are issued by commercial banks and brokerage companies,are available in minimum amounts of $100,000,and may be traded prior to maturity.

Correct AnswerverifiedShow Answer

Serial bonds are a sequence of small bond issues of progressively longer maturity.

Correct AnswerverifiedShow Answer

Sprocket and Widget is a garment manufacturing company.Which of the following would be a fixed asset for Sprocket and Widget?

Correct AnswerverifiedShow Answer

The _____ is the interest rate commercial banks charge their best customers for short-term loans.

Correct AnswerverifiedShow Answer

Based on qualitative assessments,which of the following potential investment projects is the most risky?

Correct AnswerverifiedShow Answer

The over-the-counter securities market:

Correct AnswerverifiedShow Answer

Which of the following is an arrangement by which a bank agrees to lend a specified amount of money to an organization upon request?

Correct AnswerverifiedShow Answer

The cash return as a percentage of a stock's price is called its:

Correct AnswerverifiedShow Answer

If the par value of a stock is $5 and the offering price of the stock is $2,the capital in excess of par is:

Correct AnswerverifiedShow Answer

Working capital management refers to _____.

Correct AnswerverifiedC

_____ is a written promise from one company to another to pay a certain amount of money.

Correct AnswerverifiedShow Answer

Which of the following is money owed to a business by credit customers?

Correct AnswerverifiedA

Which of the following statements is true of contrarian stock market investors?

Correct AnswerverifiedShow Answer

Long-term assets are also called _____ assets.

Correct AnswerverifiedD

A boat manufacturer orders 50 units of fiberglass material and promises to pay the supplier at a later date.The boat manufacturer will record the amount to be paid as:

Correct AnswerverifiedShow Answer

Factors such as a bond's face value,maturity date,and interest rate are specified in the:

Correct AnswerverifiedShow Answer

Which of the following statements is true of bonds?

Correct AnswerverifiedShow Answer

AMZ Inc.,a company that deals with bikes,has its own manufacturing unit.The equipment used in the manufacturing unit of the company is an example of a:

Correct AnswerverifiedShow Answer

Which of the following statements is true of junk bonds?

Correct AnswerverifiedShow Answer

The markets where firms raise financial capital are known as _____.

Correct AnswerverifiedShow Answer

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C

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A

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D

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