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Business: A Changing World, 4/e
O.C. Ferrell, Colorado State University
Geoffrey Hirt, DePaul University
Financial Management and Securities Markets
True or False Quiz
Please answer all questions.
1
Capital budgeting is the selection of liabilities that will maximize the value of the business.
A)
True
B)
False
2
Current assets are those that will be turned into cash in more than a year.
A)
True
B)
False
3
Liabilities may take many different forms, but they are all classified as debt.
A)
True
B)
False
4
Secured loans are backed by collateral that the lender can claim if the borrower does not repay the loan.
A)
True
B)
False
5
Interest is a percentage of the principal that the bank charges for use of its money.
A)
True
B)
False
6
Bank loans are the most widely used form of short-term credit.
A)
True
B)
False
7
Commercial certificates of deposit must be held until maturity.
A)
True
B)
False
8
The difference between a stock's par value and its offering price is called capital in excess of par.
A)
True
B)
False
9
The most widely used source of short-term financing is trade credit.
A)
True
B)
False
10
The shorter the potential life of a project, the greater the risk.
A)
True
B)
False
11
Investment banking is the sale of stocks and bonds for corporations.
A)
True
B)
False
12
An organized exchange is a network of dealers all over the coutnry linked by computers but with no central location.
A)
True
B)
False
13
Many firms frequently use electronic funds transfers to speed up collections.
A)
True
B)
False
14
Working capital management is the management of short-term assets and liabilities.
A)
True
B)
False
15
Astute money managers try to keep just enough cash on hand to pay bills.
A)
True
B)
False
16
Primary markets exist for the trading of publicly owned securities.
A)
True
B)
False
17
Working capital management deals with short-term assets and liabilities.
A)
True
B)
False
18
Common stock is a riskier investment than preferred.
A)
True
B)
False
19
A bond can never be transferred from one owner to another.
A)
True
B)
False
20
Floating-rate bonds are a sequence of small bond issues of progressively longer maturity.
A)
True
B)
False
2002 McGraw-Hill Higher Education
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