The time it takes between when materials are ordered and cash is collected from
receivables is referred to as the:
a. operating cycle
b. cash conversion cycle
c. assets turnover cycle
d. sales or revenues cycle
Members of the Federal Reserve System may include:
a. commercial banks with a national charter
b. credit unions
c. savings and loan institutions
d. all the above
e. none of the above
Ningbo Shipping has prepared the coming year’s pro forma balance sheet and has
estimated that external financing required would be -$230,000. The firm should prepare
to
a. repurchase common stock totaling $230,000.
b. arrange for a loan of $230,000.
c. do nothing; the balance sheet balances.
d. sell an additional $230,000 of common stock.
e. all of the above
Career opportunities in finance involving both treasury and control functions are
generally associated with:
a. business financial management
b. financial intermediaries
c. securities markets
d. government organizations
A (n) ________________ is an extra dividend declared by the firm over and above its
regular dividend payout.
a. special dividend
b. supplemental dividend
c. extra-large dividend
d. treasury dividend
e. none of the above
The broadest definition of money supply is:
a. M1
b. M2
c. M3
d. M4
Factoring accounts receivable has all of the following characteristics except:
a. money is advanced to the borrower as a loan against accounts receivable
b. accounts receivable balances are removed from the balance sheet
c. the customer payment is made to the factor
d. all of the above are characteristics of pledging
Which of the following is not a variable cost?
a. direct materials
b. direct labor
c. delivery costs
d. commissions
e. all of the above are variable costs
Dun & Bradstreet serves as:
a. an agency for rating the bonds of businesses and governmental bodies
b. the principal rating agency for commercial paper
c. a research and advisory facility for stocks and bonds
d. a general credit reporting agency covering all fields of business activity
Which of the following ratios is not a component in the return on equity using DuPont
analysis?
a. asset turnover
b. profit margin
c. equity multiplier
d. current ratio
Primary reserves
a. include the cash assets of the firm under the heading “cash and balances due from
depository institutions.
b. are short term securities held by banks that are quickly converted into cash at little
cost to the banks.
c. reflects the bank’s ability to meet depositor withdrawals.
d. reflects the bank’s ability to keep the value of a bank’s assets greater than its
liabilities.
Commercial banks lend unsecured short-term funds in the following three basic ways:
a. Commercial paper, lines of credit, and revolving credit agreements.
b. Single-payment note, revolving credit agreements, and revolving credit agreements.
c. Single-payment note, lines of credit, and trade credit agreements.
d. trade, lines of credit, and revolving compensating balances.
e. none of the above
A customer of a bank needs additional currency and cashes a check for $10,000. The
reserve requirement is 20%. The bank has no excess reserves. It must:
a. refuse the check
b. get an additional $8,000 of reserves
c. get an additional $2,000 of reserves
d. none of the above
All other things being equal, aA bond’s value will be below its maturity value of $1,000
if it pays interest of $100 per year and investors require a rate of return that is,:
a. less than 10%
b. exactly 10%
c. higher than 10%
d. either less than or greater than 10%
Which of the following are not bond rating agencies?
a. Standard and Poor’s
b. Fitch’s
c. Moody’s
d. all the above are rating agencies
e. none of the above are rating agencies
Which of the following factors does not affect savings?
a.
b. Economic expectations
c. Cyclical influences
d. Life stage of the individual or corporation
e. Inflation rate
For a given interest rate, as the length of time until receipt of the funds increases, the
present value interest factor
a. changes proportionally.
b. increases.
c. decreases.
d. remains unchanged.
When the net present value is negative, the internal rate of return is __________ the
cost of capital.
a. greater than
b. greater than or equal to
c. less than
d. equal to
e. none of the above
Administrative inflation is the tendency of prices, aided by union-corporation contracts,
to rise during economic expansion and to resist declines during recessions.
Slow economic growth in investments in another country would be an example of
political risk.
Capital formation is the process of constructing real property, manufacturing producers’
durable equipment, and increasing business inventories.
The Fed lending rate to depository institutions was consistently lower than the bank
prime lending rate during the 1980€2009 period.
Net working capital indicates the percentage of current liabilities to current assets.
Discounting is an arithmetic process whereby a future sum decreases at a compounding
interest rate over time to reach a present value.
ADRs are created and traded in dollars on U.S. exchanges. They represent a given
number of shares of a foreign firm’s stock .
Although a central bank does not necessarily operate for profit, it generally deals
directly with the public.
An odd lot is a trade involving 100 shares or multiples of 100 shares.
The degree of financial leverage measures the sensitivity of earnings per share to sales.