Multiple Choice Quiz

Please answer all questions.


1	The process of analyzing the needs of the business and selecting the assets that will maximize its value is known as
		A)	capital planning.
		B)	financial management.
		C)	comprehensive budgeting.
		D)	fixed budgeting.
		E)	capital budgeting.


2	Which is the riskiest type of bond?
		A)	serial bonds
		B)	secured bonds
		C)	floating-rate bonds
		D)	junk bonds
		E)	unsecured bonds


3	Which of the following would be classified as current assets?
		A)	cash
		B)	inventory
		C)	accounts receivable
		D)	investments
		E)	all of the above


4	When the dividend is divided by the price, the result is the
		A)	asking price.
		B)	debt to equity ratio.
		C)	earnings ratio.
		D)	dividend yield.
		E)	payout in excess of yield.


5	The difference between a stock's par value and its offering price is called
		A)	payout in excess of yield.
		B)	capital in excess of par.
		C)	preferred yield.
		D)	expected yield.
		E)	common stock.


6	_____ is (are) reinvested in the assets of a firm and belong to the owners in the form of equity.
		A)	Retained earnings
		B)	Common stock
		C)	Preferred stock
		D)	Junk bonds
		E)	Floating-rate bonds


7	Which of the following is a current liability?
		A)	certificates of deposit
		B)	inventory
		C)	accounts payable
		D)	marketable securities
		E)	investments


8	Long-term financial management is concerned with the managing of
		A)	long-term liabilities.
		B)	s equity.
		C)	long-term assets.
		D)	a and c above.
		E)	a, b, and c.


9	If the interest rate of a loan changes according to the daily average of the prime rate over the life of the loan, the interest rate is said to be
		A)	floating.
		B)	non-variable.
		C)	fixed.
		D)	sporadic.
		E)	flexible.


10	Production facilities, offices, and equipment are examples of which type of asset?
		A)	current
		B)	working
		C)	short-term
		D)	fixed
		E)	liquid


11	A(n) ________ compares current stock prices with those in a specified base period.
		A)	average
		B)	indicator
		C)	option
		D)	index
		E)	trader


12	Current liabilities are debt obligations that must be repaid within
		A)	six months.
		B)	one month.
		C)	five years.
		D)	24 hours.
		E)	one year.


13	A bond
		A)	must be repaid according to the terms set in its indenture.
		B)	is a debt instrument.
		C)	is a certificate that represents debt.
		D)	is a long-term liability.
		E)	all of the above.


14	Bonds that are not backed by specific collateral are called
		A)	unsecured bonds.
		B)	junk bonds.
		C)	floating-rate bonds.
		D)	secured bonds.
		E)	serial bonds.


15	An arrangement by which a bank agrees to lend a specified amount of money to the organization upon request is called a(n)
		A)	trade credit.
		B)	bank loans.
		C)	commercial loan.
		D)	line of credit.
		E)	prime rate.


16	Acquiring and managing funds is the primary emphasis of
		A)	lawyers.
		B)	treasurers.
		C)	financial managers.
		D)	bankers.
		E)	accountants.


17	The interest rate banks charge their best customers (usually large corporations) for short-term loans is called the
		A)	variable rate.
		B)	prime rate.
		C)	fixed rate.
		D)	daily rate.
		E)	equity rate.


18	A period of large increases in stock prices in known as a
		A)	bull market.
		B)	soaring market.
		C)	tiger market.
		D)	bear market.
		E)	market crash.


19	A finance company to whom businesses sell their accounts receivable usually for a percentage of the total face value is called a(n)
		A)	loan shark.
		B)	investment banker.
		C)	factor.
		D)	commercial lender.
		E)	intermediary.


20	When a company first issues stock to the public, it is said to be going
		A)	prospective.
		B)	corporate.
		C)	legal.
		D)	public.
		E)	private.

2002 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.