1) Shelf registration is most frequently used with new issues of common stock.
2) Antitrust policy can preclude the acquisition of a competitor.
3) Commercial paper represents secured short-term borrowing by large companies.
4) It is helpful to break down the income statement into smaller monthly periods to
enable evaluation of seasonal patterns of cash inflows and outflows.
5) The investments account represents a commitment of funds of at least one year or
more.
6) A lock-box is used to safeguard the corporation’s marketable securities.
7) When considering risk and popularity, banker’s acceptances rank behind Treasury
bills and commercial paper as a vehicle for short-term investments.
8) The “risk-free rate of return” is equal to the inflation premium plus the real rate of
return.
9) Short-term interest rates are more dependent upon inflation than on current demand
for money.
10) An investment with a $500 standard deviation and a $5,000 expected value has a
higher risk than an investment with a $4,000 standard deviation and a $50,000 expected
value.
11) The goal of a company in the growth life-cycle stage should be to maximize
dividends to shareholders.
12) Book value per share is of greater concern to the financial manager than market
value per share.
13) An increase in accounts payable represents a reduction in cash flows from
operations.
14) Bankers’ acceptances are short-term securities that arise from foreign trade.
15) Corporations tend to shift from debt financing to equity financing during bull
markets.
16) Recently, the emphasis of financial management has been on the relationship
between risk and return.
17) The higher the profit of a firm, the higher the value the firm is assured of receiving
in the market.
18) The time value of money concept is fundamental to the analysis of cash inflow and
outflow decisions covering multiple periods of time.
19) NASD regulates stockbrokers and brokerage firms.
20) The call premium tends to increase with the passage of time.