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