busines chapter 16
if the par of a stock is $5 and the capital in excess of par is $3 then its offering price is:
$2.00
if the price of a stock is $4 and its dividend yeild is $5 then the dividend of the stock is:
$20
if the dividend of a stock is $20 and its dividend yeild is $5 then the price of the stock is
$4
if the dividend of a stock is $20 and its price is $4 then its dividend yield is:
$5
a marketbale security is a temporary investment of cash
TRUE
the face value of a bond is typically
1,000
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:
3.00
if the offering price of a stock is $2 and its capital in excess of par $3, the par value of the stock is:
5.00
Pooja is an entrepreneur who starts an IT firm, 12 laptops 15 desktops
Trade credit
serial bonds are a sequence of small bond issues of progressibely longer maturity
True
_______ are markatbale securities that are short-term debt obligations sold by the US government to raise money
US tresury bills
which of the following is a long term debt instrument that requires the issuer to repay the lender in regualr interest payment until the loan is repaid on or before the specified maturity rate?
a bond
which of the following is an arrangement by which a bank agrees to lend a specific amount of money to an organization upon request?
a line of credit
which of the following is an example of a long term liability
a serial bond
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
accounts payable
which of the following is money than an organization owes to suppliers for good and services
accounts payable
which of the following is a current asset?
accounts recievable
which of the following is money owed to a business by credit customers
accunts recievable
which of the following is a short term cancelable tease that does not show up on a balance sheet>
an operating lease
which of the following is a similarity between the new york stock exchange (NYSE) and the nasdaq markets?
both exchanges bought or merged with electronic exchanges
the amount of money budgeted for the purchase of long term assets is called the :
capital budget
the process of analyzing the needs of a business and selecting the assets that will maximize its value is calles_______
capital budgeting
organization often invest the cash they earn in marketable securities, for periods as short as one day or for as long as one year, until it is needed. these investments include
certificates of deposit
Dan bought three new trucks with a loan obtained from the first national bank. if he fails to repay the loan the bank will repossess the truck the trucks typically represent:
collateral
_________ are issued by commercial banks and brokerage companies are available in minimum amounts of $100,000, and may be traded prior to maturity
commercial certificated of deposit
________ is a written promise from one company to another to pay a certain amount of money
commercial paper
_______ is the single most important source of capital for most new companies
common stock
Cash investments accounts recievable and inventory are:
current assets
long-term liabilities are
debts that will be repaid over a number of years
the cash return as a percentage of a stock's price is called its
dividend yield
the over the counter securities market:
does not have a central location
a finance company that buys other companies accounts reveivable for less than they are worth and assumes the responsibility for collecting the debt is known as a
factor
Long term assets are also called _______ assets
fixed
AMZ inc., company that deals with bikes, has its own manufacturing unit. the equipment used in the manufacturing unit of the company is an xample o a:
fixed assed
if the interest rate on a loan changes according to the daily average of the prime rate over the life of the loan, the interest rate is said to be:
floating
Corponeeds is an E-commerce company that sells office supplies in an attempt to raise long term funds the company decides to issue bonds to lenders these bonds do not have fixed interest changes depending on economic conditions the bonds issues by corponeeds are examples of
floating rate bonds
the interest rate for _______ changes with current interest rates otherwise available in the economy
floating rate bonds
when a company invest a lot of money in a particualr project, it is concerned about the amount of risk involved. if the expected life of a project is longer, its potential risk is
greater
factors such as a bonds face value, maturity date, and interest rate are specified in the:
indenture
________ and _________ are measures that are used to measure stock market performance
indexes ; averages
Zainab borrows $20,000 from a bank to pay for her education. the bank charges her five percent of the amount she borrowed, that is $1000 in this scenario, the five percent represents the:
interest
based on qualitative assessments, which of the following potential investment projects is the most risky
introducing a new product in a foregin market
corporations usually employ ______ to help sell their securities in the primary market
investment banking firms
more and more companies are now using electronic funds transfer systems to pay and collect bills online because:
it helps them increase the speed of collections and disbursements to one day
the primary advantage of owning preferred stock is that:
it is a safer investment than common stock
which of the following is true of commercial paper
it is backed by the name and reputation of the issuing company
which of the following is true of a lockbox
it is simply an address for recieving payments
which of the following statements is true of the eurodollar makret
it is used by companies to invest idle cash in international markets
which of the following is one of the utilities of the radio frequency identification (RFID) technology
it is used to better manage inventory by tracking inventory shipment
Historically _______ have been associated with companies in poor financial health and/or startup firms with limited track records.
junk bonds
which of th efollowing tyoes of bonds offer relatively high rates of interest because they have higher inherent risks?
junk bonds
which of the following involves paying a fee for usage rather than owning a particular aasset
leasing
plants, offices and equipment are considered
long term assets
working capital managment refers to ______
managing short term assets and liabilites
_______ is the price at which a particular common stock is currently trading
market value
US treasury bills certificates of deposits commercia paper and urodollar deposits are examples of
marketable securities
as idle cash does not make money, a manager may choose to invest this extra cash in temporary investment called:
marketable securities
th chief goal of financial managers who focus on current assets and liabilities is to:
maximize returns on inventory
the first time sale of stocks and bonds directly to the public is called a
new issue
the two biggest stock markets in the united states are the
new york exchange and the NASDAQ market
sprocket and widget is a garment manufacturing company which of the following would be a fixed asset for sprocket and widget?
office furniture
______ are network of dealers all over the country linked by computers, telephones, and teletype machines.
over the counter markets
which of the following markets regularly accounts for the largest total dollar, walue of all of the secondary markets?
over the counter markets
the dollar amount printed on a stock certificate is known as its
par value
stockholders who are prioritized in the distribution of a firms's dividends but cannot vote are called:
preferred stockholders
the markets where firms raise financial capital are known as _______
primary markets
the _______ is the interest rate commercial banks charge their best customers for short term loans
prime rate
if a real estate developer borrows $100,000 from a bank and ends up paying back $120,000 the $100,000 represents the
principle
if linda wilson borrows $20,000 to buy a car and ends up paying the lender a toal of $24,000 and the $20,000 represents the:
principle
of the following potential investment projects, the project that poses the least risk is:
reoairing old equipment
the coard of directors of a leading automobie compan wants to opt out for an investment project that has the least risk. which of the following projects is the board most likely to undertake?
repairing the old manufactuing equipment
______ are reinvested in the assets of the firm abd belong to the owners in the form of equity
retained earnings
stock exchanges and over the counter markets where investors can trade their securities with others are known as:
secondary markets
___________make it possible for owners to sell their stock and bonds to other investors
securities markets
________ are best described as a sequence of small bond issues of progressively longer maturity
serial bonds
the ________ is an analysts consensus of the potential stock price of a company
target price
_________ were responsible for the huge increase in stock prices in the period between 1982 and 2000
technology stocks
which of the following is called capital in excess of par?
the difference between a stock's value and its offering price
which of the following statements is true of indexes?
they compare current stock prices with those in a specific base period
which of the following statements is true of floating rate bonds
they do not have fixed interest payments
which of the following statements is true of contraian stock market investors?
they invest when the prices of stock are low
which of the following statements is true of bonds?
they must be repaid according to the terms set in the indenture
which of the following statements is true of junk bonds?
they offer relatively high rates of interest
in the context of managing cash in an organization which of the following is true?
to manage a firms cash companies try to speed up cash collections from customers
why do companies use a lockbox?
to speed up cash collection from customers
________ is the credit extended by suppliers for the purchases of their goods and servises
trade credit
the most widely used source of short term financing is
trade credit
which of the following is the most important account payable
trade credit
astute money managers try to keep just enough cash on hand to pay employee wages and utility bills, this cash is referred to as:
transaction balances
new issues of stocks and bonds are sold directly to the public and to institutions in what is known as the primary market
true
_________ are also called debentures and are not backed by specific collateral
unsecured bonds
which of the following statements is true of dividend yield?
when the dividend of a stock is divided by the price the result is the dividend yield
eurodollar deposits can only be made at banks located in london
FALSE
the principle is the amount of money a business pays o use a banks funds
FALSE
Maria wants to start a resteraunt of her own, bank agrees to lend her 5000, what type of funding
Line of credit
