If a firm actually sells its accounts receivable, the process is known as:
a. wholesale financing
b. pledging
c. field crediting
d. factoring
62. The risk cause by changes in inflation that affect revenues, expenses and
profitability is called:
a. interest rate risk
b. business risk
c. tax risk
d. financial risk
e. none of the above
5. When the United States Treasury makes a payment to an individual or business, it
usually takes the form of a:
a. check drawn on a Federal Reserve Bank
b. check drawn directly against the U.S. Treasury
c. special Treasury voucher
d. check drawn against a bank in which tax balances are held
If a firm purchases materials on credit and thus has accounts payable, its cash
conversion cycle will be:
a. longer than its operating cycle
b. the same length as its operating cycle
c. shorter than its operating cycle
d. the same length as its sales turnover cycle
For most of the remainder of the decade after the September 11th terrorist attacks:
a. the Fed then maintained a high liquidity, low interest rate environment.
b. the Fed then maintained a low liquidity, low interest rate environment.
c. the Fed then maintained a low liquidity, high interest rate environment.
d. the Fed then maintained a high liquidity, high interest rate environment.
e. none of the above
The present value of an ordinary annuity of $350 each year for five years, assuming an
opportunity cost of 4 percent, is
a. $288
b. $1,896.
c. $1,750.
d. $1,558.
The __________________, passed in 1968, requires the clear explanation of consumer
credit costs and garnishment procedures (taking wages or property by legal means) and
prohibits overly high-priced credit transactions.
a. Consumer Credit Expansion Act
b. Credit Growth Act
c. Consumer Credit Protection Act
d. Consumer Safety Act
e. none of the above
The Small Business Administration:
a. lends exclusively to small business investment companies that in turn lend to small
businesses
b. makes only working capital loans
c. lends to businesses with reasonable prospects of repayment but which cannot obtain
credit through private channels
d. none of the above
Ningbo Steel had year end 2011 and 2012 retained earnings balances of $5,000,000 and
$6,000,000 respectively. The firm paid $100,000 of dividends in 2012. Based on this
information, Ningbo Steel’s net profit after taxes in 2012 was:
a. $100,000
b. $900,000
c. $1,000,000
d. $1,100,000
e. none of the above
Foreign banks in the United States:
a. are prohibited in all 50 states
b. need the approval of the Federal Reserve
c. are not subject to federal examination
d. none of the above
The effect of ______________ and _______________ on the value of a firm’s stock
and the wealth of shareholders is zero.
a. stock dividends, stock splits
b. cash dividends, stock dividends
c. cash dividends, stock splits
d. none of the above
In order to borrow $100,000 for a 10% loan on discount basis, the firm will actually
have to borrow:
a. $110,000
b. $111,111
c. $100,000
d. $90,000
A firm has fixed operating costs of $10,000, the sale price per unit of its product is $25,
and its variable cost per unit is $15. The firm’s operating breakeven point in units is
a. 250
b. 400
c. 667
d. 1,000
A rise in prices not offset by increases in quality is called:
a. deflation
b. inflation
c. stagflation
d. none of the above
The Public Company Accounting Oversight Board (PCAOB) is
a. a not-for-profit corporation that oversees managers of public corporations
b. a not-for-profit corporation that oversees CEOs of public corporations
c. a for-profit corporation that oversees managers of public corporations
d. a not-for-profit corporation that oversees auditors of public corporations
e. a not-for-profit corporation that oversees managers of public corporations
NOW accounts:
a. are not subject to ceiling rates under Regulation Q
b. enable depository institutions to compete effectively for funds that were flowing in
large amounts to nonblank money market funds
c. typically pay interest rates equal to that paid by money market funds
d. all the above
Which of the following characteristics is not descriptive of an amortization schedule?
a. Each payment is the same.
b. The same dollar amount of interest is paid with each payment.
c. ayment on principal increases with each total payment.
d. alance owed is reduced by each payment.
In reaction to the then developing 2007-2009 financial crisis, short-term interest rates
_______ sharply and were ______ than ______ percent by October, 2008.
a. declined, less, 0.5
b. rose, more, 10
c. declined, more, 6.
d. declined, less, 20
e. none of the above
Private placement can avoid SEC registration and all SEC regulations.
A NPV profile shows how NPV varies given alternative IRRs.
$1000 deposited in a bank that earns 7% per year will become approximately $7,600 in
30 years.
A capital budgeting project’s cash flows, including the total up-front cost of the project,
are typically known with certainty before the project starts.
The contribution margin represents contribution of each unit sold that first goes toward
paying fixed costs.