Intro to Business - Ch 16 Financial Management and Securities Market

Private individual investors who sometimes provide venture capital to small firms in need of equity capital are called:

Angel investors

The funds that are reinvested in the firm out of profits and after dividends are paid are called:

Retained earnings

Edward Olmos is a soybean farmer. He has arranged business loan with terms that guarantee that he can borrow up to $30,000 whenever he needs it within the next year. He must pay interest only on the unpaid loan balance. Olmos has arranged a:

Revolving credit arrangement >> A line of credit is an agreement between a bank and a business that specifies the maximum amount of unsecured short-term borrowing the bank will make available to the firm over a given period of time.

Payments in the form of more stock to existing stockholders are called:

Stock dividends

The important forms of long-term (capital) expenditures are:

Term loans, mortgage loans, and bonds

Shazia Khan is the global managing partner for PricewaterhouseCoopers. She said that her company is eager to invest in newly created biotech companies because the U.S. has an aging population that will need new medications and treatments. What kind of equity capital would Khan be likely to provide?

Venture capital

A company sells its accounts receivable to a financial institution that is in the business of buying accounts receivable at a discount. This sale is called:

factoring

Esselte is a Swedish-based company that sells office supplies. It went public when it was founded, and it remained public until 2002 when it was taken private. Now that Esselte is private, it:

No longer sells stock to the public

Which of the following statements about preferred stock is true?

Preferred stockholders are paid dividends before the company can pay any dividends to common stockholders.

Grainger Distribution Company sold Long Electronics ten circuit breakers for $179.00 each. Long Electronics will be allowed thirty days to pay the bill. Grainger will carry the $179.00 on its books as a(n):

Account receivable

Refer to the video: What's the difference between bonds and stocks? Bond maturities typically range from ___ to ___ years.

1;30

Long-term debts (liabilities) for corporations and governments are called:

Bonds

Chez Dove is an independent coffeehouse/bookstore that went bankrupt only eight months after opening due to an unexpected demand for cash to fix a leaking roof. Better cash ___ might have allowed the business to continue operation.

Management >> Making sure that enough cash is on hand to pay bills as they come due and to meet unexpected expenses is called cash management.

The oldest and largest organized securities exchange in the United States is the:

New York Stock Exchange

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel's exacting standards, it is building a magnificent revolving restaurant overlooking the Arabian Sea. The restaurant structure is an example of a(n):

capital expenditure >> Funds invested in long-lived assets, such as land, buildings, machinery, and equipment, are called capital expenditures.

Albee Construction Company, a financially strong corporation that builds roads and bridges, finances its equipment leases by issuing unsecured short-term debt, which is called:

Commercial paper

Blackwell Investments specializes in acting as an intermediary in taking companies public. This financial middleman is an example of a(n):

Investment banker

Long-term debt would be used to:

Do none of the above >> (Not to : pay employees salaries / buy new tablecloths for a restaurant / replace broken glass in a window / provide customer with a cash discount)

Jose Garces owns a restaurant in Panama Beach, Florida. He has arranged a business loan with the bank where he has his business account. The terms of the loan allow him to borrow up to $13,500 within the next year if the bank has funds available to lend; he must pay interest only on the loan balance. Garces has arranged a:

Line of credit >> A line of credit is an agreement between a bank and a business that specifies the maximum amount of unsecured short-term borrowing the bank will make available to the firm over a given period of time.

When Magna Manufacturing sells hand on screwdriver sets to Malloy Building Supply Company, Magna bills the tool manufacturer for the screwdriver purchase with terms of payment, which specify when the account is due. This type of unsecured loan is called ____ credit.

Trade >> Trade credit is the extension of credit by the seller to the buyer between the time the buyer receives the products and when it pays for the products.