Question 1

Trade credit is the least popular form of short-term financing.

Accepted Answer

A) True 
 B)False

Question 2

A __________ is a bond backed only by the reputation of the issuing corporation.

Accepted Answer

A)   registered bond
B)   convertible bond
C)   mortgage bond
D)   debenture bond
E)   serial bond

Question 3

Selling stock

Accepted Answer

A)   is a form of financing that must be repaid at maturity.
B)   requires the payment of interest every three months.
C)   is a form of equity financing.
D)   is a form of debt financing.
E)   is a form of financing that has low flotation costs.

Question 4

Speculative production is an example of a long-term financial need.

Accepted Answer

A) True 
 B)False  False

Question 5

Typically, long-term loans are normally repaid in three to seven years.

Accepted Answer

A) True 
 B)False

Question 6

A budget is a financial statement that projects income and/or expenditures over a specified future period.

Accepted Answer

A) True 
 B)False  True

Question 7

A __________ budget estimates a firm's expenditures for major assets.

Accepted Answer

A)   cash
B)   capital
C)   long-term needs
D)   traditional
E)   zero-base

Question 8

Which of the following would be allowed to elect a corporation's board of directors?

Accepted Answer

A)   Corporate management
B)   Common stockholders
C)   Corporate bondholders
D)   Long-term lenders
E)   Suppliers

Question 9

When compared to other forms of short-term financing, factoring is relatively inexpensive.

Accepted Answer

A) True 
 B)False

Question 10

The use of borrowed funds to increase the return on owners' equity is

Accepted Answer

A)   equity capital.
B)   Fed financing.
C)   common stock financing.
D)   financial suicide.
E)   financial leverage.

Question 11

A budgeting approach in which every expense in every budget must be justified is referred to as __________ budgeting.

Accepted Answer

A)   zero-base
B)   financial-based
C)   traditional
D)   TQM
E)   efficient-market

Question 12

Commercial paper is a short-term promissory note issued by a small business.

Accepted Answer

A) True 
 B)False

Question 13

Debt capital is money obtained from the sale of shares of ownership in a business.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be paid first?

Accepted Answer

A)   Dividends paid on common stock
B)   Dividends paid on preferred stock
C)   Interest on corporate bonds
D)   Bonuses paid to stockholders
E)   Contributions to retained earnings C

Question 15

The most basic form of corporate ownership is

Accepted Answer

A)   long-term equity loans.
B)   SEC-qualified stock.
C)   preferred stock.
D)   common stock.
E)   corporate bonds.

Question 16

The most popular and inexpensive form of short-term financing is

Accepted Answer

A)   factoring.
B)   promissory notes.
C)   commercial paper.
D)   unsecured bank notes.
E)   trade credit.

Question 17

Financial planning begins with establishing a set of valid goals and objectives.

Accepted Answer

A) True 
 B)False

Question 18

An IPO occurs when a corporation sells common stock to the general public for the first time.

Accepted Answer

A) True 
 B)False

Question 19

The prime interest rate is the

Accepted Answer

A)   highest rate charged by a commercial bank.
B)   average rate charged by a commercial bank.
C)   lowest rate charged by a commercial bank.
D)   rate charged by the Federal Reserve Bank for business loans.
E)   rate charged by the SEC for business loans.

Question 20

Debt capital is financing provided by the owner or owners of the business.

Accepted Answer

A) True 
 B)False

Exam 16: Mastering Financial Management

Trade credit is the least popular form of short-term financing.

Correct AnswerverifiedShow Answer

A __________ is a bond backed only by the reputation of the issuing corporation.

Correct AnswerverifiedShow Answer

Selling stock

Correct AnswerverifiedShow Answer

Speculative production is an example of a long-term financial need.

Correct AnswerverifiedFalse

Typically, long-term loans are normally repaid in three to seven years.

Correct AnswerverifiedShow Answer

A budget is a financial statement that projects income and/or expenditures over a specified future period.

Correct AnswerverifiedTrue

A __________ budget estimates a firm's expenditures for major assets.

Correct AnswerverifiedShow Answer

Which of the following would be allowed to elect a corporation's board of directors?

Correct AnswerverifiedShow Answer

When compared to other forms of short-term financing, factoring is relatively inexpensive.

Correct AnswerverifiedShow Answer

The use of borrowed funds to increase the return on owners' equity is

Correct AnswerverifiedShow Answer

A budgeting approach in which every expense in every budget must be justified is referred to as __________ budgeting.

Correct AnswerverifiedShow Answer

Commercial paper is a short-term promissory note issued by a small business.

Correct AnswerverifiedShow Answer

Debt capital is money obtained from the sale of shares of ownership in a business.

Correct AnswerverifiedShow Answer

Which of the following would be paid first?

Correct AnswerverifiedC

The most basic form of corporate ownership is

Correct AnswerverifiedShow Answer

The most popular and inexpensive form of short-term financing is

Correct AnswerverifiedShow Answer

Financial planning begins with establishing a set of valid goals and objectives.

Correct AnswerverifiedShow Answer

An IPO occurs when a corporation sells common stock to the general public for the first time.

Correct AnswerverifiedShow Answer

The prime interest rate is the

Correct AnswerverifiedShow Answer

Debt capital is financing provided by the owner or owners of the business.

Correct AnswerverifiedShow Answer

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False

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True

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C

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