Chapter 16 Quiz

In finance, the opportunity for profit is called:

return

Financial managers constantly strive for a balance between:

the opportunity for profit and the potential for loss

The _____ system is the first electronic-based stock market and the largest over-the-counter market.

NASDAQ

Which of the following statements about preferred stock is true?

Preferred stockholders are paid dividends before the company can pay any dividends to common stockholders

Term loans:

are accurately described by all of the above

Financial managers:

are described by none of the above

Organized stock exchanges operate like a(n):

auction company

As the Toronto-based Four Seasons hotel chain remodels an existing hotel in Mumbai to bring it to the five-star hotel's exacting standards, it is building a magnificent revolving restaurant overlooking the Arabian Sea at World. The restaurant structure is an example of a(n):

capital expenditure

A(n) _____ is a type of loan often used to finance buildup of inventory for seasonal (cyclical) businesses just before their strongest sales period.

unsecured bank loan

Many large investors are now handling trades without Wall Street's services. Through the use of computer technology, they are making direct transactions. This relatively new development is called the _____ market.

fourth

Esselte is a Swedish-based company that sells office supplies. It went public when it was founded, and it remained public until 2002 when it was taken private. Now that Esselte is private, it:

no longer sells stock to the public

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

A secured loan requires that the borrower pledge specific assets to secure the loan. These assets are called:

collateral

Which of the following statements about preferred stock is true?

Preferred stock produces a fixed-amount dividend.

_____ are the link between public companies and the investors interested in buying their stock.

Stockbrokers

Dalrymple Bay Coal Terminal, a coal-handling facility and export terminal in Queensland, Australia, has issued triple-A rated bonds for $680 million in Australian dollars. The bonds will be used to refinance existing bank debt caused by the acquisition of eases from the Queensland government in 2002. The Commonwealth Bank of Australia acted as investment bankers to the transaction. This means the Commonwealth Bank of Australia:

bought the bonds from Dalrymple and sold them to the public

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

_____ management is the art and science used to determine the most effective ways to acquire and use funds to achieve the firm's goals.

financial

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