SPTE 440 Midterm

An estimation of an organization's worth according to the stock market is __________.

Market Value

"When calculating the nominal interest rate, which of the following premiums is added to account for the risk of time and interest rate risk?"

Maturity risk premium

Which of the followings forms of budgeting is preferred in sport as it begins with a floor of expenses while also using cost behavior and cost identification techniques?

Modified zero based budgeting

Three interrelated sectors exist within finance. Which of the following includes securites markets, investmnet banking, insurance, and mutual fund managemnet?

Money and Capital Markets

Which of the following is not the main function of the Federal Reserve?

Monitoring the money supply

"Under this sport franchise ownership model, __________ is the most common model of team ownership."

Multiple Owners/Private Investment Syndicate Model

When the citizens of Hamilton County, Ohio, decided to raise their taxes to fund two new sports stadiums rather than to raise taxes for something like improving the educational system in the county, they missed a chance to improve the educational system. What is this known as?

An opportunity cost

A series of equal payments or receipts made at any interval of time is referred to as which of the following?

Annuity

"For this type of bond, the annualized interest rate on the bonds is reset at auctions held every 7 to 35 days."

Auction-rate bonds

"In general, the chances of receiving back an investment in a large market Major League Baseball team is __________ that for a small market team."

Greater than

The __________ shows the organization's income over a specified period of time.

Income Statement

Last year s budget is increased or decreased by a percentage using this method of budgeting (a form of line-item budgeting).

Incremental budgeting

Which of the following is calculated by investigating changes in the Consumer Price Index (CPI)?

Inflation Rate

Which ratio measures how often an organization sells and replaces its inventory over a specified period of time?

Inventory turnover ratio

Three interrelated sectors exist within finance. Which of the following sectors focuses on security choice made by individual and institutional investors as portfolios are being built?

Investments

What are the 3 interrelated sectors that exist within finance?

Investments, Money and Capital Markets, & Finance management

Nominal Interest Rate equation

K = k* + IP + DRP + LP + MRP k* = risk-free rate of interest IP = inflation premium DRP = default risk premium LP = liquidity premium MRP = maturity risk premium

What is determined by comparing the risk of one asset to another?

Level of risk

Which of the following sports league is exempted from the Sherman Anti-Trust Act?

MLB

The vast majority of for-profit businesses in the US operate as which of the following?

Sole Proprietorships

The vast majority of for-profit businesses in the United States operate as which of the following?

Sole proprietorships

The owners of which franchise agreed to a perpetuity when they negotiated to fold their team after the ABA and NBA merger.

St. Louis Spirits

Which financial statement tracks cash in and cash out of an organization over a specified period of time?

Statement of cash flows

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed assetÕs value into account with depreciation occurring late after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, accelerating depreciation

Which of the following methods of depreciation attempts to take the non-linear loss of a fixed asset's value into account, with depreciation occurring quickly after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15.

Sum-of-years digits, decelerating deprecation

Three interrelated sectors exist within finance. The goal or outcome of those working in which of the following sectors is to acquire and secure funds to maximize shareholder wealth?

Financial Management

Of the following, which is not an advantage of incremental budgeting?

The approach encourages managers to spend up to the budget to ensure that the budget is maintained the following year.

Which of the following is the nominal or quoted risk-free rate of interest?

The real-risk-free rate plus an inflation premium

This budgeting system requires starting the budgeting process with a zero base.

Zero based budgeting

This type of financing includes charitable donations, either cash or in-kind, made to an organization and is the primary source or operating and investing income for major collegiate sports programs.

Gift

"For all sport and entertainment organizations, __________ financing may include land use, tax abatements, direct facility financing, and infrastructure improvements."

Government

Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time?

Balance Sheet

The major disadvantages of forming a business under a _____ structure is that there is double taxation of profits, and the cost of forming the business and operating the business is higher than other structures.

C corporations

Which of the following budgets allows management to forecast future requirements related to property, facilities, and major equipment?

Capital expenditure budget

The __________ forecasts how much cash the organization will have on hand and how much it will need to meet expenses.

Cash budget

Which of the following ratio is calculated by using current assets divided by current liabilities?

Current Ratio

Which ratio is an indication of whether an organization can meet its current liabilities_those due within a year_with its current assets?

Current Ratio

"When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used?"

Debt

Which ratio measures how an organization finances its operation with debt and equity?

Debt ratio

When using zero-based budgeting, each part of the organization in which budget decisions are made is referred to as a __________.

Decision unit

The risk describes the chance that companies or individuals will be unable to make the required payments on their debt obligations is known as

Default Risk

What is a measure of risk or uncertainty of time?

Discount Rate

Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the assetÕs use?

Double-declining balance

The __________ lists the primary activities undertaken by a unit to achieve its goals and allocate dollar amounts to each.

Expense budget

Gift financing is a minor source of operating income for major collegiate sports programs.

False

Which league prohibits the publicly traded ownership model?

NFL

"In its policies regarding deferred salaries, which of the following leagues has stated that deferred payments must be placed by the team in a league fund for administration and future disbursement?"

National Football League

Which of the following is a profitability ratio that measures the percentage of an organization's total sales or revenues that was net profit or income?

Net profit margin

The __________ of a bond is the face value, or amount of principal that the bond is worth when the principal amount is due.

Par Value

Which of the following is a single cash flow per year forever into the future?

Perpetuity

Which of the following was the first major professional sports team to declare bankruptcy in the middle of a long-term facility lease?

Phoenix Coyotes

Which of the following is today's value of a future cash flow?

Present Value

Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings?

Price-to-earnings ratio

What is the interest rate that banks charge their best customers?

Prime rate

This budgeting system is associated with output budgeting in which specific goals and objectives form the framework for a strategic, goal oriented budgeting process.

Program planning budgeting systems

Which of the following refers to the purchasing power of a dollar?

Real Value

Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments?

Return on equity

A __________ is a forecast because it is based on projecting future sales.

Revenue budget

Which of the following is the rate of return required over and above the risk-free-rate?

Risk Premium

Risk increases as the length of time funds are invested increases. What is this known as?

Risk of time

When sport leagues do not expand into a market that can support a franchise, or when they create rules to limit the movement of existing franchises, which of the following economic concepts is being applied?

Scarcity

What is the difference between simple and compound interest?

Simple interest pays interest on principal.

What of the following is the correct description of simple interest and compound interest?

a. Simple interest is calculated on principle only. b. Compound interest is calculated on both principle and generated interest. c. Simple interest is calculated on both principle and generated interest d. Compound interest is calculated on principle only. e. Both a and b

"Typically, owners in a specific industry compete for wealth maximization. Owners in sport might not be interested in this goal. Rather, they may be interested in __________." a. Winning championships b. Seeking celebrity status c.Protecting a community asset d. All of the above

d. All of the above

"Of the following statements regarding the Arts, Entertainment, and Recreation segment (NAICS 71) of our economy, which of the following is true?" a. The industry employs a large number of full-time workers and relatively few seasonal and part-time workers. b. Those working in the industry tend to be older than those working in other industries. c. Wages for those working in the industry tend to be higher than wages paid to those working in other industries. d. Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.

d. Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector.

"One source of risk is current economic conditions. Of the following, which is impacted by changes in current economic conditions?" a.Capital finance b.Operating budgets c.League loan pools d."a, b, and c are all impacted"

d."a, b, and c are all impacted"

"If it is expected that it will be hard to sell a security, which of the following will be added?"

liquidity premium