QUIZ QUESTIONS: Comprehensive 2

Accounting recognizes that assets, such as machinery and buildings, lose value over time. Accountants will record a portion of the cost of an asset as an expense each year through the use of: a. depreciation b. appreciation c. asset audits d. asset valuation

a.

Compared to advertising, publicity offers the advantage of greater: a. believability b. flexibility c. personal appeal d. message repetition

a.

When working with international firms, U.S. businesses: a. expect socially responsible behavior from their business partners b. tend to ignore the ethics of their international partners c. try to avoid judging our international business partners by U.S. standards d. feel that their responsibility is limited to the United States

a.

The most expensive mode of transportation is: a. railroad b. air c. truck d. ship

b

A _________ forecast predicts the revenues, costs, and expenses a firm will incur for a period of one year or less. a. capital expenditures b. near-horizon c. short-term d. tactical

c.

A good public relations program recognizes that the: a. company must not ever admit fault b. media are not to be trusted since they profit by selling bad news c. firm must be willing to make changes in its policies and procedures d. firm must be independent of production and service activities.

c.

Attracting attention, describing contents, explaining benefits and identifying the uses of a product are all functions of: a. UPCs b. market segmentation c. packaging d. target marketing

c.

Designed to create more confidence in banking institutions, the FDIC was established: a. In 1908 as the result of the banking panic in 1907 b. In 1917 as the nation entered WWI c. during the Great Depression of the 1930s d. soon after the Civil War

c.

__________ refers to standards of moral behavior a. legality b. integrity c. ethics d. responsibility

c.

Which of the following represents the primary purpose of a firm using institutional advertising? a. reduces cost b. full coverage of local markets c. creates a positive image for the firm d. high visibility of a specifically targeted message

c. Institutional advertising is an attempt to create an attractive image for a firm.

Ivy is a bookkeeper for the Newport Corporation. She takes the firm's transactions and records them in a record book or computer program referred to as: a. a credit account b. an asset database c. a journal d. a debit program

c. Journals are the books where accounting transactions are first recorded.

The accounting book or computer program where each day's transactions are first recorded is called a: a. general ledger b. balance sheet c. journal d. posting workbook

c. journal

_________ advertising supports a particular view or position on an issue. a. Trade b. comparison c. institutional d. advocacy

d

A recent study revealed that most Americans have: a. a great desire to help their community b. strong moral values c. a strong desire to do what is right d. few moral absolutes

d.

Long-term financing would normally be used to purchase: a. supplies b. inventory c. highly liquid assets d. buildings

d.

Open-market operations involve: a. participating with the IMF b. monitoring the reserve requirement c. increasing and decreasing interest rates d. the buying and selling of brands

d.

The traditional promotion mix for a firm consists of: a. strategic mix of price, product, place and advertising b. marketing intermediaries employed by the firm to create a supply value chain c. various types of advertising media the firm selects to reach each specific target market d. advertising, personal selling, public relations, and sales promotion used to reach a target market.

d.

A firm negotiates a(n) __________ with its bank. This arrangement gives the firm access to a specified amount of unsecured short-term funds, provided the bank has the funds available. a. reserve account b. line of credit c. capital drawing agreement d. asset drawing account

b.

Many products are promoted by emphasizing their key benefits, rather than setting the price lower than that of competitive goods. This emphasis on a product's benefits illustrates a(n) __________ strategy. a. nonprice competition b. penetration c. bundled package

a. Nonprice competition is often used because prices are easy to match. Few competitors can match the image of a friendly, responsive, consumer-oriented company.

Which of the following firms would be most likely to use a selective distribution strategy for its products? a. maker of designer men's suits b. newspaper publisher c. maker of snack foods such as potato chips d. super luxury car manufacturer

a. (it's not the car one because luxury cars normally have single dealership in a local area, exclusive distribution).

The primary purpose of a push strategy is to: a. push the product down the distribution channel to retail stores b. rush the production schedule for products and beat competitors in the market c. push products away from traditional channels of distribution to save costs

a. In a push strategy, the producer uses promotional tools to convince wholesalers and retailers to stock and sell merchandise.

A firm's marketing mix refers to the combination of: a. people directly involved in making marketing decisions b. strategies regarding product, price, place and promotion c. goods the firm offers to different market segments d. advertising media the firm utilizes to promote its products

b.

A leading cause of new-product failure is: a. excessive product differentiation b, product promises that are not delivered c. the automation of the product development process d. insufficient competition

b.

A phone call to a government official by an employee of the Enron Corporation disclosed the deception and dishonesty of the firm's accounting records. This employee played the role of a: a. moral policeman b. whistleblower c. ethics officer

b.

A(n) __________ allows money to be exchanged electronically more quickly and more economically than with paper checks. a. virtual banking operation (VBO) b. electronic funds transfer system (EFT) c. tele-checking system (TELE) d. electronic check conversation (ECC)

b.

Careful consideration of the use of computers in accounting indicates that computers: a. have a very limited use in accounting due to inadequate privacy controls. b. are tools to help accountants perform his or her job. c. will soon eliminate all of the accounting functions d. are of little use to small-business owners that need accounting services.

b.

Elise has completed a review of data her department has collected. The team contacted potential customers through phone interviews, online surveys and focus groups. Elise is disappointed because the results strongly indicate the product idea she helped develop is unlikely to be popular. What should Elise do? a. Proceed with product development because the opinions of experienced marketing managers often turn out to be more accurate than market research. b. Accept the results and reevaluate the proposed product. c. Put the product on temporary hold, throw out the results of the research, and design and conduct a new study.

b.

International issues of social responsibility and ethical behavior are: a. the result of greed found in capitalist countries b. difficult and not as clear-cut as U.S. firms would like them to be c. found primarily in countries with a low standard of living

b. Some question whether U.S. businesses should expect or require international suppliers to adhere to U.S. law

Many business decisions are made in hopes of improving a firm's bottom line. Which of the following financial statements will reveal a firm's bottom line? a. trial balance b. income statement c. statement of cash flows d. balance sheet

b. The financial statement that shows the bottom line (profit after expenses and taxes) is the income statement.

A company's income statement is important to accountants and other stakeholders. It reveals a: a, company's capitalized value b. company's ability to earn a profit over time c. company's ability to distribute goods or services in a timely manner d. company's sources of funding

b. The income statement contains several elements including revenues, expenses and net profit or loss

When Alex in Quince Orchard, MD uses a check to buy a tractor from Steven in Austin, TX, _______ different banks are involved in the transaction. a. none b. 15 c. 4 d. 2

c. Deposit check at local bank ---- local bank deposit check in Federal Reserve Bank in Dallas ---- Federal Reserve in Dallas sends check to Federal Reserve Bank in Richmond ---- forwards check to Alex's local bank in MD

Which of the following responses is the best and most comprehensive? "A company's accounting information is useful to _________". a. managers within the firm, exclusively b. primarily the IRS and other government agencies that regulate the firm c. marketing research firms for pricing insights d. managers, owners, creditors, employees and the government

d.

___________ replace the typical magnetic strip on a credit or debit card with a microprocessor. a. check conversions b. direct deposit cards c. e-cards d. smart cards

d.

____________are merchant wholesalers who perform all of the distribution functions. a. total-capacity wholesalers b. intensive contact wholesalers c. retailers d. full-service wholesalers

d.

Anthony would like to have his brokerage firm handle more of his financial needs because he has been pleased with the service provided when he bought and sold stocks and bonds. If he explores the services offered by such firms in more depth, he will find that: a. brokerage firms are becoming serious competitors for banks and other depository institutions by offering high-yield combination savings and checking accounts and money market accounts, as well as certain types of loans b. although brokerage firms offer attractive banking services, federal law prohibits individual investors from holding both a checking account and a securities account with the same firm.

a.

Big Dog Building is one of the largest cement companies in the Midwest. When the firm raised its priced by 11%, all of its competitors soon announced that they too were raising their prices by 11%. It appears this industry is influenced by a ____________ strategy. a. price leadership b. market pricing c. price skimming d. price discrimination

a.

Businesses are using _________ and other ways to track goods and services and control from point of origin to point of consumption. "Tracking" is an important part of the process of managing the flow of goods, an activity that marketers call ____________. a. radio frequency identification (RFID); logistics b. reverse logistics; materials handling c. radio frequency identification (RFID); intermediation

a.

By the time of the Civil War, the U.S. banking system operated: a. inefficiently with different banks issuing different types of currencies b. much the same as it does today c. as an efficient model that many other countries copied d. under the control of the Federal Reserve System

a.

Determining what is involved for a firm to be socially responsible: a. varies even among those who are interested in corporate responsibility b. helps government officials develop appropriate legislation c. is easy d. varies from industry to industry due to different laws

a.

Following an ethics-based approach to decision making will normally lead to: a. lower employee turnover b. higher profits c. more competition d. lower prices

a.

In a(n) _________ distribution system the producer manages all of the marketing functions at the retail level. a. administered b. contractual c. conglormerate d. master limited

a.

In evaluating the best advertising medium to reach a specific target market, the clear choice is: a. direct mail b. newspapers c. network television d. cable TV

a.

In the past, __________ was an important advertising strategy used in movies. Now it is also used in video games. It can be easily altered to reflect another advertiser, depending upon which advertiser has purchased ad time. a. product placement b. sampling c. direct mail d. commercials

a.

Producers often use ________ as a primary basis for setting prices on the goods and services they offer the public. a. costs b. tariffs c. quotas d. market share

a.

The Federal Reserve System consists of _______ Federal Reserve Banks a. 12 b. 5 c. 14 d. 19

a.

Which of the following indicates that U.S. businesses are demanding socially responsible behavior from their international suppliers? a. The decision of Nike to cancel orders from suppliers that violate its ethics code b. The creation of the North American Free Trade Zone (NAFTA) between the U.S., Canada and Mexico c. the establishment of the EEOC d. The decision of Walmart to open stores worldwide

a.

Which of the following presents an effective technique to improve cash management? a. speed up cash collections and slow down cash payments b. Speed up both collections and payments of cash. c. Speed up cash payments and slow down cash collections d. Slow down both the payment and collections of cash.

a.

Producers who use an exclusive distribution strategy for their products can expect retailers who carry the products to do which of the following? a. carry a large inventory of their products b. sell their products at substantially discounted prices c. pay attention to the multiple competing brands that they carry d. provide limited service and delivery for their products

a. A retailer that has exclusive rights to sell a manufacturer's products has an incentive to carry a larger inventory, provide exceptional service, and pay more attention to that manufacturer's brand than to other brands.

Payroll debit cars: a. can be issued to persons without bank accounts who can use them to pay bills online, or access cash from an ATM. b. have limited use because they can only act as a credit card, and the recipient does not have access to cash. c. must go through the Federal Reserve's Automated Clearing House system.

a. Efficient way for some firms to pay their workers

Which of the following would be a unique focus of an integrity-based ethics code? a. Shared accountability among employees b. Increased penalties for code violations c. Increased control over employee actions d. Improved awareness of the relevant laws

a. Integrity-based ethics codes define the organization's core values, create an environment that supports ethical behavior, and stress a shared accountability among employees

Fast Fine Foods markets some of its products to consumers looking for simple, quick meals. Fast Fine Foods also offers another line of products targeted to people interested in low-fat, high-nutrition foods. The company's strategy of dividing the market into groups that want similar things from the products they buy is an example of: a. demographic segmentation b. benefit segmentation c. volume segmentation d. target segmentation

b.

Finance managers spend the majority of their time managing: a. cash flow b. short-term financial needs c. long-term financial needs d. equity financing

b.

For small businesses, product differentiation: a. usually concentrates on the pricing component of the total product offer b. can be an important strategy to gain market share c. is less important than for big firms with multiple product lines. d. is more difficult than it is for larger firms because of the high cost of product research and development.

b.

Jessica, a sophomore in college, is contemplating majoring in marketing. She has asked several friends for advice and their comments are listed below. Which of these comments is the most accurate and likely to help Jessica? a. Marketing is a career that offers stability, good pay and ample employment opportunities. Marketing activities today are essentially the same as they were several decades ago. b. Marketing offers business students a wide array of career options c. You should major in marketing only if you want to work in advertising and selling.

b.

Marketing intermediaries: a. complicate the distribution process b. add value that exceeds the cost of their services c. add cost that exceeds the value they provide d. increase the number of exchange relationships in the channel.

b.

One advantage of magazine advertising is that: a. the exposure time is short b. the ad can target specific audiences c. the ad is available at the point of purchase d. the ad must conform to post office regulations

b.

The Fed uses ________ to regulate the money supply. a. the deposit requirement b. the discount rate c. the political negotiation process

b.

The World Bank's mission is to lend money to developing nations to help boost their economic development in various industries. Since its inception, the World Bank has taken significant criticism of its programs. Farmers in a cooperative in the developing nation of Forlornia have benefited by World Bank loans. Recently, their processing facilities that employ several laborers are taking criticism from human rights organizations. Which of the following is a common criticism of this group? a. Farmers who own the cooperative are not vaccinating their workers against AIDS, even though the World Bank partners with pharmaceutical firms who provide free AIDS medications. b. Working conditions in the processing plant are unacceptable, similar to sweatshop conditions. c. The loans are too small, and for all practical purposes, Farmers are spending their funds on sustainability measures rather than producing the most they can from each crop.

b.

Tracy wants to start her own business, but knows little about how to set up an accounting system or interpret financial information, She says, "I'll just hire a part-time bookkeeper to handle all that type of stuff, and focus my attention on what I like - finding ways to satisfy my customers." Which of the following is the best response to Tracy's comments? a. You have a good plan. Only managers of large firms require knowledge in accounting. Owners and managers of small businesses can easily get by with just a part-time bookkeeper. b. Although you can hire someone to keep your books, you'll still need to know how to read, understand and interpret basic accounting reports in order to make good business decisions. c. Most entrepreneurs would agree with your opinion.... so time spent by business owners on accounting tends to take them away from more important tasks.

b.

When a brand becomes commonplace and identified with a category of goods rather than the unique product of a specific manufacturer, the brand may become a: a. trademark b. universal product code c. generic name d. product liability issue

b.

Which of the following statements about channels of distribution is most accurate? a. The fewer the marketing intermediaries in a channel of distribution, the more efficient the channel is likely to be. b. Channels of distribution always include retailers, but they may or may not also include wholesalers. c. Some channels of distribution include marketing intermediaries, while in others a manufacturer sells directly to the final consumer d. Channels of distribution always begin with a manufacturer and end with consumers, and always have one or more marketing intermediaries in between.

b.

Which of the following strategies provides an example of the most current era whose principles today's businesses are embracing? a. At TapTops international, a smart phone manufacturer, the production line is a 24-hour operation, even if demand is low. b. Comfy Corner Hotels is all about the experience. Their goal is to make certain that every guest leaves their properties with a better feeling than when they first arrived. c. Corner Bookstore is known for stocking the top ten books on the monthly best sellers list. These books are almost always available at a reasonable cost to the bookstore, and they usually fly off the shelves. Corner Bookstore sees this as a win-win situation for themselves and their customers.

b.

_________ may represent several producers in a specific territory, as long as they do not represent competing products. a. sales contractors b. manufacturer's agents c. freight forwarders d. consignment brokers

b.

The formula for break-even analysis includes which of the following components? a. forecasted sales b. variable cost per unit of output c. depreciation d. forecasted cash requirements

b. Break-even analysis finds the level of sales at which total revenue is equal to total cost. (found by dividing total fixed cost by the difference between price and variable cost per unit)

After years of using a mass marketing strategy, Digital Print Shops has responded to new competition from national chain stores by focusing on small market segments that have been ignored by their larger competitors. Digital believes that by offering these market segments personalized customer services it can attract a loyal group of customers willing to pay premium prices. Digital's strategy to improve profits is known as: a. micro-marketing b. niche marketing c. respondent change d. environmental scanning

b. Niche marketing - the process of finding small but profitable market segments and offering products designed to appeal specifically to those groups

NoSneeze markets a group of similar products for people suffering from the common cold. The products differ mainly in the strength of the dosage and in whether they also contain additional medications to hep the consumer sleep while sick. Sarah, a marketing manager, is responsible for marketing the company's products and is involved in major decisions concerning the development of new products. Sarah serves as a: a. target market manager b. brand manager c. market mix specialist

b. A brand manager has direct responsibility for all elements of the marketing mix for a single brand or a product line.

Zachary is going to major in business. However, he has never had much interest in subjects with numbers. He would like to avoid taking any finance courses if possible. What would Zachary do? a. Take a finance course to satisfy graduation requirements b. Realize that his success in business requires an understanding of financial issues. c. Avoid finance courses and focus on subjects that enjoys d. Change majors and go into the arts

b. Finance and accounting are two areas that everyone involved in business should study.

Which of the following is a benefit for a brand name for a seller? a. reduction in search time b. additional prestige c. increased repeat purchases d. quality assurance

c

Although best used as a last resort, many small businesses find it convenient to use ____________ as a short-term source of financing. Although this form of short-term debt comes with high interest rates, it provides a quick line of credit for many firms, including start-up companies who may not be able to secure bank loans. a. factoring b. commercial paper c. credit cards d. promissory notes

c.

Evidence indicates that the best promotional strategy for firms operating globally is: a. based on total operating costs and the nation's disposable income b. a "one-mix-fits-all" strategy c. to uniquely design a strategy for each country d. designed by foreign intermediaries who control promotion

c.

Firms utilize __________ when they attempt to add value to their product by offering service after the sale, product demonstrations, or interactive customer websites. a. relationship branding b. niche marketing c. nonprice competition d. break-even segmentation

c.

Penelope's company __________ her paycheck semimonthly into her checking account, a paperless process and no check is issued to the employee. Penelope's company has also adopted an efficient ______ system that has record of the net pay that was deposited into her personal checking account, how much was taken out for taxes, Medicare, social security, etc. a. debits; enterprise funds transfer b. debits; electronic funds transfer c. direct deposits; electronic funds transfer d. markets; smart card

c.

PharmaONE plans to use its computers to post information from journals to the ledger instantaneously. One obvious benefit of this technology is: a. less scrutiny from agencies such as the IRS b. to shift financial decision making from people to programmed technology c. readily available financial information d. a reduction in the number of accountants required by the firm

c.

Taken together, all of the organizations that move goods from the sources of raw materials to ultimate consumers are known as: a. marketing priority network b. multifunction network c. supply chain d. critical distribution path

c.

Top leaders in government and business today are: a. held to less strict moral standards than in the past b. at odds with the general public in regard to ethical issues c. held to higher ethical standards than in the past d. less interested in social responsibility than in the past

c.

Which of the following offers the greatest potential for meaningful interaction between buyers and sellers? a. infomercials b. product placement c. online advertising d. testimonials

c.

___________ includes anything that people generally accept as payment for goods and services a. an intangible asset b. a barter good c. money d. a commodity

c.

_____________ marketing involves developing a unique mix of goods and services for each individual customer. a. Volume b. Usage C. One-to-one d. B2B

c.

Treetop Nursery offers customer credit terms of 2/15 net 30. This gives customers a: a. 2 percent discount if they pay in thirty days b. 15 percent discount if they pay in thirty days c. 2 percent discount if they pay in fifteen days d. 15 percent discount if they pay in two days.

c. 2% discount to customers paying by the 15th day after the billing, no discount between the 16th and 30th day after the billing

Coolest Closet, a chain of retail closing stores, wants to assure investors and other outsiders that its financial statements are accurate. One way to do so would be to hire a public accounting firm to: a. take overall stock of its accounting functions b. provide a "generally accepted practices" endorsement c. perform an independent audit d. produce an internal audit

c. An independent audit is an evaluation and unbiased opinion about the accuracy of a company's financial statements. Such audits are performed by public accountants.

Which of the following is the best example of cognitive dissonance? a. Phillip has been shopping for a new TV but has not yet made a purchase because he is having trouble deciding which brand to buy. b. Braylon is torn between going to the movies with friends or staying at home and studying for an exam tomorrow. c. Drake just bought an expensive tablet and is already worried that he could have found a better deal if he had shopped more carefully. d. Lorelai decided to eat at a restaurant she previously avoided after learning several celebrities endorse the restaurant.

c. Cognitive dissonance - the term for the doubts a consumer may experience after making a purchase.

Which of the following refers to the process of dividing the total market into several groups with similar characteristics? a. market differentiation b. market determinants c. market partitioning d. market segmentation

d.

Consumer decisions regarding the products they buy are often influenced by their nationality, religion or ethnic origin. Marketers realize that the consumer decision-making process is impacted by the consumers: a. market position b. four Ps c. subcultures d. cognitive behaviors

c. Subculture is a set of values, attitudes and ways of doing things that result from belonging to a certain ethnic, religious, racial or other group with which a consumer closely identifies.

One thing that franchise systems, wholesaler-sponsored chains, and retail cooperatives all have in common is that they are all: a. dependent on multilevel marketing strategies b. distribution systems in which producers also act as intermediaries in the distribution process c. forms of contractual distribution systems

c. The three basic types of contractual distribution systems are franchise systems, wholesaler-sponsored chains, and retail cooperatives.

A high-level manager gathers his team of supervisors together to create a new office policy that will affect all employees. After receiving a verbal okay from the supervisors, he then proceeds to pass around a written form of the new policy and asks all members of the team to initial it. He explains to the supervisors that the new policy will be posted in the break rooms on each floor of corporate headquarters. If you were a part of this work team, which question would you ultimately ask yourself before initialing your approval? a. Is it a lose-lose situation? b. Is it balanced? c. How will it make me feel about myself? d. Is it legal?

c. by initialing, the supervisor is confident that it is the right decision and is proud to shaer the decision with friends and coworkers. He/she is willing to show everyone that he/she believes it is the ethical way to operate.

The managers of Comfort Clothing regularly compare actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Comfort Clothing is exercising financial: a. budgeting b. derivatives c. control d. planning

c. Comparing actual performance with projected results is part of the financial control process

Soles Shoes produces top-quality designer shoes, created for the person concerned about style. Soles gives only a few preferred retailers in a given market area the right to market its product. Soles Shoes uses: a. intensive distribution b. exclusive distribution c. selective distribution d.limited function distribution

c. Selective distribution is the use of a limited number of preferred retailers in a given area.

Which of these statements about corporate bonds is correct? a. Bonds provide equity financing b. issuing new bonds dilutes the existing ownership in the firm c. interest paid to bondholders represents a tax-deductible business expense d. Debenture bonds require assets pledged as collateral.

c. Corporate bonds are essentially long-term IOUs issued by corporations. The interest paid on long-term debt is a tax-deductible expense.

An accountant who works for a single business or government agency is referred to as: a. commission accountant b. certified accountant c. public accountant d. private accountant

d.

The Southside Sweetery has a loyal following. When it recently moved from its longtime storefront to a famous resort area, it took a big risk. Southside collects names and email addresses of its customers and maintains a presence on a few social media sites in order to send messages about promotions and coupons to valued customers. Marketing professional refer to this strategy as: a. production management b. sales management c. niche marketing d. customer relationship management (CRM)

d.

The Sweet Temptations Yogurt Company just completed the first stages of development of its new low-calorie frozen yogurt breakfast bars and immediately took its products directly to customers. Marketers partnered with a large theme park in Orlando, FL to perform _________., to see if consumers found this product to be a quick way to eat breakfast on the road and if they would be willing to pay for the bar. a. product screening b. commercialization c. prototyping d. concept testing

d.

The financial ratios that measure a firm's ability to pay its short-term debts are called: a. profitability ratios b. leverage ratios c. equity ratios d. liquidity ratios

d.

The use of promotional tools to persuade wholesalers and retailers to stock and sell merchandise represents a: a. pull strategy b. product placement strategy c. segmentation strategy d. push strategy

d.

To effectively run a business, it is necessary to: a. hire a full-time accountant b. use a public accounting firm c. make certain that you do not spend too much time on your accounting system d. understand and use accounting information

d.

To improve America's business ethics: a. Congress must pass an ethics bill b. ethics must be taught in every business school c. a company's suppliers must be thoroughly investigated for ethical violations d. company leaders should adopt and support a corporate code of ethics

d.

Which of the following correctly identifies why companies would use a market segmentation strategy? a. This strategy enables a firm to identify common traits in different consumer groups b. They can avoid antitrust laws by selecting a small slice of a larger market c. Government regulations require firms to maintain accurate records to show that the firm has not discriminated against a market segment d. With limited resources, firms can better satisfy the wants and needs of a smaller target market.

d.

Which of the following is an advantage of magazine advertising? a. ability to quickly change message b. relatively short life c. short exposure time d. superior color

d.

Seedling Plant Science invented a drought resistant grass seed that only needs watering three times each year. In order to expand distribution worldwide, the company whose product produces lush green foliage needs serious funding. The handful of seed scientists that own the company are seeking _________, but understand that they will relinquish a size-able share of ownership in order to obtain the funds. a. debenture capital b. international line of credit c. leverage d. venture capital

d. Venture capital is money invested in new or emerging companies that have great profit potential. Venture capitalists usually demand a share of ownership in return for equity funding.

Successful use of financial leverage requires a firm to: a. register with the local government commission that administers market leverage b. establish and operate a venture capital organization to minimize the use of equity financing c. negotiate with lenders to establish a line of credit d. earn a higher return on its investments than the interest rate it pays to acquire funds.

d. The goal of leverage is to use borrowed funds to increase a firm's rate of return. This can be accomplished by investing borrowed funds at a higher rate of return than the cost of acquiring those funds.