Final Exam Business 1301

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When conflicts arise between the long-term interests of owners and those of other stakeholders, the fiduciary duty required of financial managers generally leads them to make decisions that are most consistent with the interests of ownership.

True

When it comes to creating customer satisfaction, perceived value is just as important as actual value.

True

Your target market is the group of people who are most likely to buy your product.

True

In the context of stock indices, which of the following is a difference between the Dow Jones Industrial Average (DJIA) and the Standard & Poor's 500 (S&P 500)?

Unlike the DJIA, the S&P 500 is a much broader index.

A bond or share of preferred stock that gives its holder the right to exchange it for a stated number of shares of common stock is referred to as a century bond.

False

A budgeted income statement is a detailed forecast of future cash flows that helps financial managers identify when their firm is likely to experience temporary shortages or surpluses of cash.

False

A budgeted income statement is a projected financial statement that forecasts the types and amounts of assets a firm will need to implement its future plans and how the firm will finance those assets.

False

A factor is a restriction lenders impose on borrowers as a condition of providing long-term debt financing.

False

A major disadvantage of primary data is that it gets frequently outdated.

False

A manufacturing firm does not necessarily need an inventory of parts and materials to assemble its products.

False

Because it is normally unsecured, commercial paper is only offered by firms with no credit ratings.

False

Benny-Duke Inc. reported a net income of $7 million but paid no dividends to its shareholders. The shareholders should sue the company for failure to provide a return on their equity investment.

False

Chromiate, a digital camera brand, decides to introduce a new MP3 player, GiZmo, under its brand name. Chromiate's decision is an example of brand extension.

False

Cognitive dissonance is the payoff for delivering value and generating satisfaction.

False

Consumer marketers direct their efforts to customers who are buying products to use either directly or indirectly to produce other products.

False

Demographic segmentation refers to dividing the market based on where consumers live.

False

Developing specific programs to help customers validate their purchase choices is one way marketers attempt to increase cognitive dissonance.

False

During the production era of marketing, the top business priority was to deliver unmatched value to customers.

False

Dynamically continuous innovations are brand-new ideas that radically change how people live.

False

Escribo Marketing holds annual blood donation camps and conducts other similar charitable events in educational institutions. Escribo Marketing is using people marketing.

False

Green marketing has created an abundance of promotional opportunities, as marketers reach out to consumers via new tools, such as interactive advertising, virtual reality displays, text messaging, and video kiosks.

False

In the context of accounting for the time value of money, discount rate remains constant in a specified number of time periods.

False

In the context of business product categories, the marketing of accessory equipment focuses on personal selling and includes more customization than installations.

False

In the context of consumer product categories, shopping products have less selective distribution than convenience products.

False

In the context of the various strategies for investing in securities, a buy-and-hold approach works only if a person makes frequent trades.

False

Institutional investors amass large pools of financial capital by accepting savings account deposits.

False

Manufacturers rarely emphasize packaging because this aspect of the product has little relevance to a customer's decision-making process.

False

Members of the general public can directly trade stocks in the over-the-counter market.

False

Leverage ratios measure the extent to which a firm uses _____.

Financial Leverage

Dora works for PowTran Corp. Her primary responsibilities include managing the firm's working capital and analyzing long-term investment opportunities for the firm. Dora is most likely a part of the firm's _____ team.

Financial Management

A commitment to meeting social responsibilities can contribute to a more profitable company and an increase in shareholder value.

True

A disadvantage of debt financing is that creditors often impose covenants on the borrower.

True

A downside of placing market orders is that investors may end up buying at a higher price than he or she expected to pay

True

A marketing plan is a formal document that defines marketing objectives and the specific strategies for achieving those objectives.

True

A sell limit order tells a broker to sell the shares only if the price is at or above a specified value.

True

Accounts receivable represents what customers who buy on credit owe the firm.

True

Both producers and retailers tend to promote shopping products.

True

Business products are purchased to use either directly or indirectly in a production process.

True

Cannibalization occurs when a producer offers a new product that takes sales away from its existing products.

True

Cash budgets normally cover a one-year period and show projected cash inflows and outflows for each month.

True

Certificate of deposit is an interest-earning deposit that requires the funds to remain deposited for a fixed term.

True

Cherry Doux Bakery reaches an agreement with Candy Call to use Candy Call's original dark chocolate in its popular chocolate cookies and sell them in its stores. The two companies are using a strategy known as cobranding

True

Commercial paper, which is sometimes issued for as little as two days, can be issued for up to 270 days.

True

Competitive advertising is a key marketing strategy of the maturity phase of a product life cycle.

True

David needs to acquire financial capital to purchase a printing press for his business. David can either acquire the financial capital for the press by borrowing money from a bank or by purchasing the press on credit from his supplier.

True

Dynamically continuous innovations are characterized by marked changes to existing products.

True

In a public offering, securities are sold to anyone among the interested investors who are willing and financially able to buy them.

True

In the context of bonds, the current yield expresses a bond's interest payment as a percentage of the bond's present market price rather than its par value.

True

In the context of branding, line extensions are similar products offered under the same brand name.

True

In the context of business products, the marketing tactics of maintenance products emphasize efficiency.

True

In the context of each NASDAQ stock, the bid price indicates how much a market maker will pay per share to buy a stated quantity of the stock.

True

In the context of marketing research, secondary data is existing data that marketers gather or purchase for a research project.

True

Investors who employ a buy-and-hold investment approach invest in index mutual funds and exchange-traded funds.

True

One of the key responsibilities of an investment bank is to arrange for the actual sale of the securities.

True

Par value is the value of a bond at its maturity; what the issuer promises to pay the bondholder when the bond matures.

True

Passed during the early twenty-first century, the Sarbanes-Oxley Act included provisions to ensure that external auditors offered fair, unbiased opinions when they examined a company's financial statements.

True

Primary data is the new data that marketers compile for a specific research project.

True

Product diffusion happens at different speeds, depending on the individual consumer and on the product itself.

True

The Dodd-Frank Act of 2010 created the Financial Stability Oversight Council to identify emerging risks in the financial sector so that action could be taken to rein in risky practices before they led to a crisis.

True

The extent to which retained earnings are used as a source of long-term capital for a firm, depends on the state of the economy.

True

The goal of continuous innovation is to distinguish a product from the competition.

True

The prices of unsought products vary wildly.

True

The social/cultural element of the marketing environment covers a vast array of factors, including lifestyle, customs, language, attitudes, interests, and population shifts.

True

Through the use of technology, marketers can lower costs and deliver greater value to their customers.

True

The stocks of firms that do not meet the listing requirements of stock exchanges are traded on the _____.

Over-the-counter market

Which of the following is a difference between common stockholders and preferred stockholders?

Common stockholders are assured a greater capital gain than preferred stockholders when a company experiences strong earnings.

Arnoury, a car service station, takes feedback from clients after servicing their cars, which gives the clients a sense of importance. Arnoury's management also ensures rectification and improvement of its services based on clients' feedback. Which of the following marketing strategies does this scenario best illustrate?

Customer relationship management

Mrs. Jamieson, a retiree, likes to invest in preferred stocks and bonds as it involves very little risk. She knows that the value of many of these stocks will not increase drastically, but the small returns help supplement her pension. Mrs. Jamieson's approach is an example of the market timing strategy.

False

National Association of Securities Dealers Automated Quotation System (NASDAQ) started as a physical location where brokers met to buy and sell stocks for their clients.

False

People marketing involves drawing people to a particular place.

False

Primary data tends to be lower in cost than secondary data.

False

Private placements are usually more time consuming and complex than public offerings.

False

Projects with potential for high returns generally have a low degree of uncertainty and risk.

False

Recycle, don't drink and drive, buckle your seatbelt, support our political party, donate blood, and don't smoke are all examples of popular causes that use event marketing.

False

Return-on-equity indicates how much net income a firm earned per share of common stock outstanding.

False

Shopping products are the inexpensive goods and services that consumers buy frequently with limited consideration and analysis.

False

Store brands are also called manufacturers' brands.

False

Term loans issued by commercial banks are popularly used by financial institutions and large corporations because they typically carry lower interest rates than commercial paper.

False

The Sarbanes-Oxley Act of 2002 reversed the Glass-Steagall Act's prohibition of banks selling insurance or acting as investment banks.

False

The commerce ministry of Setina Islands, a tax haven country, has been advertising the country's business opportunities and tourist-friendly culture in various international magazines. The advertisements illustrate idea marketing.

False

The current ratio is calculated by dividing a firm's current liabilities by its total assets.

False

The date a bond comes due is called its record date.

False

The difference between the prices at which securities are bought and sold is called a thrift.

False

The idea screening stage of the new product development process involves the formal process of soliciting feedback from consumers by trying out the product concept.

False

The marketing concept has gathered momentum across the economy, leading to the marketing era, unfolding over the last decade, which zeros in on long-term customer relationships.

False

The two key aspects of product quality are level and longevity.

False

In the context of product adoption and diffusion, which of the following questions relates to the product characteristic of trialability?

How easily can potential consumers sample the new product?

Which of the following statements is true of commercial paper?

It is not backed by a pledge of collateral.

A _____ is an order to a broker to buy a specific stock only if its price is below a certain level, or to sell a specific stock only if its price is above a certain level.

Limit order

Which of the following marketing strategies can be best employed for attracting tourists?

Place Marketing

Which of the following characteristics of a well-chosen target market states that the people of the target market must be willing and able to spend more than the cost of producing and marketing a product?

Profitability

A health-drink company faces a lot of flak for misquoting the nutritional facts on its product packages. Once it clears the charges, the company hires a firm that helps it in reviving a positive image in the media as well as the broader community. The firm's primary task is to constantly communicate with the media personnel and make sure that the media runs unpaid stories that create a favorable impression about the company. This scenario exemplifies the use of:

Public Relations

Which of the following has incited leading-edge marketers to set higher standards in key areas such as environmentalism, abolishment of sweatshops, and involvement in the local community?

Social Responsibility

Jessica, a business tycoon, always buys her jewelry from a retailer. She has been a loyal customer, and she does not trust other brands. This scenario exemplifies the purchase of _____.

Specialty Products

In the year 1938, Popoud, a chocolate manufacturing company, was finding it difficult to trade its products because people were reluctant to spend money on nonessential goods. However, the company continued to manufacture chocolates in large quantities. In the context of the evolution of marketing, which of the following eras does this scenario most likely refer to?

The Selling era

Which of the following statements is true of open-end mutual funds?

They redeem old shares when investors want to cash in.

The goal of a knockoff is:

To Copy a competition

Duk Yu, a beverage company, buys its raw materials from Nessange, a fruits and vegetables exporting company, without making any payment at the time of purchase. Instead, Nessange allows Duk Yu to pay the total purchase amount within a period of six months. Which of the following short-term financing options is being used by Duk Yu in the given scenario?

Trade Credit

cash equivalents

_____ are safe and highly liquid assets that many firms list with their cash holdings on their balance sheet.

In the introduction stage of the product life cycle, companies are primarily focused on:

building customer awareness of the product


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