Intro to Business - Chapter 16

Which of the following statements about preferred stock is true?

Preferred stock produces a fixed-amount dividend.

Secured short-term loans are usually secured by:

accounts receivable and inventory

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

bonds

Funds invested in long-lived assets, such as land, buildings, machinery, and equipment, are called:

capital expenditures

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

The primary goal of the financial manager is to:

maximize the value of the firm to its owners

A(n) _____ loan is a long-term loan using real estate or other assets as collateral.

mortgage

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

retained earnings

Herschel George is a soybean farmer. He has arranged a 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. George has arranged a:

revolving credit agreement

In seeking a balance between the opportunity for profit and the potential for loss, a financial manager is dealing with the concept of _____ trade-off.

risk-return

Business loans available from commercial banks with terms generally five to twelve years and secured or unsecured are called _____ loans.

term

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

term loans, mortgage loans, and bonds

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

The three main types of unsecured short-term loans are:

trade credit, bank loans, and commercial paper

A secured Internet service provider would be very likely to attract the attention of _____ because it is in a high-tech industry with lots of opportunity for rapid growth.

venture capitalists

Which of the following statements about competition among stock exchanges is true?

Electronic communications networks (ECNs) allow institutional traders to make direct transactions in what is called the fourth market.

_____ is the process of buying securities from corporations and governments and reselling them to the public.

Underwriting

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

Keisha Hunter keeps track of day-to-day operational data to make sure her employer has enough cash to run the business and will determine if and when the company she works for should open a second distribution center. Hunter is a(n) _____ manager.

financial

Securities that are not traded on the organized stock exchanges are traded in the:

over-the-counter market