Sport FINA final exam
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 None of the above
all of the above
1. Which of the following is sold by either a government agency or a non-profit corporation set up to build a facility? a. Certificate of participation b. Tax increment financing c. Contractually obligated income d. Asset backed securities e. None of the above
certificate of participation
1. When a team has signed multiyear contracts to receive money, these revenue sources can be used as collateral to get loans. This is referred to as __________. a. Certificate of participation b. Tax increment financing c. Contractually obligated income d. Asset backed securities e. None of the above
contractually obligated income
1. Which ratio is an indication of whether an organization can meet its current liabilities―those due within a year―with its current assets? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio
current ratio
1. Which of the following is the amount earned annually from the interest payment compared with the price of the bond reflected as a percentage return? a. Coupon rate b. Par value c. Maturity d. Current yield e. Yield to maturity
current yield
1. Which ratio measures how an organization finances its operation with debt and equity? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio
debt ratio
1. Which of the following is added to the risk-free rate to reflect the likelihood that the issuer will default? a. Inflation risk premium b. Default risk premium c. Liquidity premium d. Maturity risk premium e. None of the above
default risk premium
1. What is a measure of risk or uncertainty of time? a. Inflation rate b. Interest rate c. Business activity rate d. Development rate e. Discount rate
discount rate
1. Historically, which bond was the most common method used for facility financing? a. General obligation bonds b. Auction-rate bonds c. Lease revenue bonds d. Revenue bonds e. All of the above
general obligation bonds
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. a. Debt b. Equity c. Retained earnings d. Government e. Gift
gift
1. Of the following, which is NOT a form of equity financing? a. A loan b. Retained earnings c. Government funding d. Gifts e. Donations
government funding
1. In general, the chances of receiving back an investment in a large market Major League Baseball team is __________ that for a small market team. a. Less than b. Slightly less than c. Equal to d. Greater than e. None of the above
greater than
1. The __________ shows the organization's income over a specified period of time. a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above
income statement
1. Of the following, which is an indirect source of public financing? a. Sales tax revenue b. Sin tax revenue c. Tourism tax revenue d. Lottery proceeds e. Tax abatements
tax abatements
1. Which of the following is a single cash flow per year forever into the future? a. Annuity b. Infinite annuity c. Perpetuity d. Inflation rate e. Infinite cash flow
Perpetuity
1. Other than __________, sport leagues in the United States are subject to the Sherman Act. a. The National Football League b. The National Basketball League c. Major League Baseball d. The National Hockey League e. Major League Soccer
MLB
1. During which phase of facility construction were most sport facilities built with private dollars? a. Phase 1 b. Phase 2 c. Phase 3 d. Phase 4 e. None of the above
phase 1
1. What percentage of businesses have equity ownership? a. 5% b. 25% c. 50% d. 75% e. 100%
100%
1. Which league prohibits the publicly traded ownership model? a. NBA b. MLB c. NFL d. MLS e. NHL
NFL
1. Which of the following is a bond issued by a municipality in which the revenue stream backing the payment of the bond is an actual lease, not just revenues from a source? a. General obligation bonds b. Auction-rate bonds c. Lease revenue bonds d. Revenue bonds e. All of the above
lease revenue bonds
1. What is determined by comparing the risk of one asset to another? a. Risk of time b. Level of risk c. Risk premium d. Liquidity premium e. None of the above
level of risk
1. If it is expected that it will be hard to sell a security, which of the following will be added? a. Inflation risk premium b. Default risk premium c. Liquidity premium d. Maturity risk premium e. None of the above
liquidity premium
1. An estimation of an organization's worth according to the stock market is __________. a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio
market value
1. During which phase of facility construction were sport facilities primarily financed using general obligation bonds? a. Phase 1 b. Phase 2 c. Phase 3 d. Phase 4 e. None of the above
phase 2
1. 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? a. A marginal cost b. A fixed cost c. A variable cost d. An opportunity cost e. None of the above
An opportunity cost
1. 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. a. Sole proprietorships b. General partnerships c. Subchapter S corporations d. Limited liability corporations e. C corporations
C corporation
When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used? a. Debt b. Equity c. Retained earnings d. Government e. Gift
Debt
1. Which of the following is the depreciation method that is most aggressive at allocating loss of useful life to the early years of the asset's use? a. Straight-line b. Sum-of-years digits, decelerating deprecation c. Sum-of-years digits, accelerating depreciation d. Double-declining balance e. Units of production
Double-declining balance
1. 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? a. National Basketball Association b. Major League Soccer c. National Hockey League d. National Football League e. Major League Baseball
NFL
1. What is the interest rate that banks charge their best customers? a. Discount rate b. Federal funds rate c. Prime rate d. Statement rate e. None of the above
Prime rate
1. 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? a. Demand b. Scarcity c. Price d. Equilibrium e. None of the above
Scarcity
1. The vast majority of for-profit businesses in the United States operate as which of the following? a. Sole proprietorships b. General partnerships c. Subchapter S corporations d. Limited liability corporations e. C corporations
Sole Proprietorships
1. The owners of which franchise agreed to a perpetuity when they negotiated to fold their team after the ABA and NBA merger. a. New York Nets b. Denver Nuggets c. San Antonio Spurs d. Indiana Pacers e. St. Louis Spirits
St. Louis Spirits
1. Which financial statement tracks cash in and cash out of an organization over a specified period of time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above
Statement of cash flows
1. 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 late after purchase. Using this method, the denominator for a fixed asset with a useful life of five years is 15. a. Straight-line b. Sum-of-years digits, decelerating deprecation c. Sum-of-years digits, accelerating depreciation d. Double-declining balance e. Units of production
Sum-of-years digits, accelerating depreciation
1. 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. a. Straight-line b. Sum-of-years digits, decelerating deprecation c. Sum-of-years digits, accelerating depreciation d. Double-declining balance e. Units of production
Sum-of-years digits, decelerating depreciation
1. 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. Both a and b e. a, b, and c are all impacted
a, b and c are all impacted
1. In order for investors to purchase stock in a company, they will require a return of at least a certain amount. The amount investors require depends on which of the following? a. Production opportunities b. Time preferences for consumption c. Risk d. Inflation e. All of the above
all of the above
1. Of the following bond types, which is issued by a public entity? a. General obligation bonds b. Auction-rate bonds c. Lease revenue bonds d. Revenue bonds e. All of the above
all of the above
1. The choices that individuals and organizations make regarding financial management are influenced by which of the following? a. Demand b. Scarcity c. Price d. Only a and c are correct e. All three—a, b, and c—are correct
all of the above
1. A series of equal payments or receipts made at any interval of time is referred to as which of the following? a. Cash inflow b. Cash outflow c. Annuity d. Lump sum e. None of the above
annuity
1. Here, a sport team may package together guaranteed or expected revenue streams and sell bonds based on the assets. a. Certificate of participation b. Tax increment financing c. Contractually obligated income d. Asset backed securities e. None of the above
asset backed securities
1. For this type of bond, the annualized interest rate on the bonds is reset at auctions held every 7 to 35 days. a. General obligation bonds b. Auction-rate bonds c. Lease revenue bonds d. Revenue bonds e. All of the above
auction-rate bonds
1. Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above
balance sheet
1. Which of the following is calculated by investigating changes in the Consumer Price Index (CPI)? a. Inflation rate b. Interest rate c. Business activity rate d. Development rate
inflation rate
1. Which ratio measures how often an organization sells and replaces its inventory over a specified period of time? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e. Debt ratio
inventory turnover ratio
1. When calculating the nominal interest rate, which of the following premiums is added to account for the risk of time and interest rate risk? a. Inflation premium b. Liquidity premium c. Default risk premium d. Maturity risk premium e. None of the above
maturity risk premium
1. 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? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio
net profit margin
1. The __________ of a bond is the face value, or amount of principal that the bond is worth when the principal amount is due. a. Coupon rate b. Par value c. Maturity d. Current yield e. Yield to maturity
par value
1. During which phase of construction were stadiums built with a mix of public and private dollars? The stadiums usually only housed one major tenant, not two. a. Phase 1 b. Phase 2 c. Phase 3 d. Phase 4 e. None of the above
phase 3
1. Which of the following was the first major professional sports team to declare bankruptcy in the middle of a long-term facility lease? a. New York Yankees b. Phoenix Coyotes c. Milwaukee Brewers d. San Francisco Giants e. New England Patriots
phoenix coyotes
1. Which of the following is today's value of a future cash flow? a. Nominal value b. Real value c. Future value d. Present value e. None of the above
present value
1. Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio
price-to-earnings ratio
1. Which of the following refers to the purchasing power of a dollar? a. Nominal value b. Real value c. Future value d. Present value e. None of the above
real value
1. Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e. Price-to-earnings ratio
return on equity
1. Which type of bond is a form of public finance paid off solely from specific, well-defined sources such as hotel taxes, ticket taxes, or other sources of public funding? a. General obligation bonds b. Auction-rate bonds c. Lease revenue bonds d. Revenue bonds e. All of the above
revenue bonds
1. Risk increases as the length of time funds are invested increases. What is this known as? a. Risk of time b. Level of risk c. Risk premium d. Liquidity premium e. None of the above
risk of time
1. Which of the following is the rate of return required over and above the risk-free-rate? a. Risk of time b. Level of risk c. Risk premium d. Liquidity premium e. None of the above
risk premium