Archives: Quiz

The explicit costs, such as legal and administrative expenses, associated with corporate default are classified as _____ costs. A. flotation B. issue C. direct bankruptcy D. indirect bankruptcy E. unlevered Answer: A business firm ceases to exist as a going […]

Which one of the following methods determines the amount of the change a proposed project will have on the value of a firm? A. net present value B. discounted payback C. internal rate of return D. profitability index E. payback […]

Which one of the following names matches the country where the bond is issued? A. Empire: United Kingdom B. Western: United States C. Samurai: China D. Bulldog: France E. Rembrandt: Netherlands Answer: Miller Mfg. is analyzing a proposed project. The […]

Which of the following are benefits derived from short-term financial planning? I. having advance notice of when your firm will require external financing II. being able to determine the extent of time for which a loan is required III. having […]

The price-sales ratio is especially useful when analyzing firms that have which one of the following? A. volatile market prices B. negative earnings C. positive PEG ratios D. a negative Tobin’s Q E. increasing sales Answer: Money market securities have […]

Currently, Glasgow Importers sells 280 units a month at a price of $729 a unit. The firm believes it can increase its sales by an additional 40 units if it switches to a net 30 credit policy. The monthly interest […]

You’re trying to determine whether to expand your business by building a new manufacturing plant. The plant has an installation cost of $12 million, which will be depreciated straight-line to zero over its 4-year life. The plant has projected net […]

Under credit terms of 1/5, net 15, customers should: A. always pay on the 15th day. B. take the 5 percent discount and pay immediately. C. take the discount and pay on the day following the day of sale. D. […]

Which one of the following is the primary difference between a swap contract and a forward contract? A. underlying asset B. number of exchanges C. daily marking to the market D. option versus obligation E. time of payment Answer: Real […]

Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense. The addition to retained earnings is $418 and net new equity is $500. The tax rate is 35 percent. Sales are $15,900 and depreciation is $680. What are […]

In the spot market, $1 is currently equal to £0.6211. Assume the expected inflation rate in the U.K. is 2.6 percent while it is 4.3 percent in the U.S. What is the expected exchange rate four years from now if […]

The last date on which you can purchase shares of stock and still receive the dividend is the date which is _____ business days prior to the date of record. A. 1 B. 2 C. 3 D. 4 E. 5 […]

The common stock of Westover Foods is currently priced at $28.80 a share. One year from now, the stock price is expected to be either $25 or $30 a share. The risk-free rate of return is 4.2 percent. What is […]

What is the amount of the cash flow from investment activity for 2012? A. $18,100 B. $24,800 C. $29,300 D. $32,000 E. $39,400 Answer: Recently, you discovered a putable income bond that is convertible. If you purchase this bond, you […]

A trader has just agreed to exchange $2 million U.S. dollars for $1.55 million Euros six months from today. This exchange is an example of a: A. spot trade. B. forward trade. C. currency swap. D. floating swap. E. triangle […]

Which one of the following is a use of cash? A. increase in notes payable B. decrease in inventory C. increase in long-term debt D. decrease in accounts receivables E. decrease in common stock Answer: The internal rate of return […]

Which one of the following is an unintended result of the Sarbanes-Oxley Act? A. more detailed and accurate financial reporting B. increased management awareness of internal controls C. corporations delisting from major exchanges D. increased responsibility for corporate officers E. […]

The bid price is: A. an aftertax price. B. the aftertax contribution margin. C. the highest price you should charge if you want the project. D. the only price you can bid if the project is to be profitable. E. […]

Steve just computed the present value of a $10,000 bonus he will receive in the future. The interest rate he used in this process is referred to as which one of the following? A. current yield B. effective rate C. […]

The ability to notice things without engaging in deliberate search is referred to as: A) cognitive alertness B) cognitive awareness C) managerial alertness D) entrepreneurial alertness E) individual awareness Answer: A(n) ________, which is intended to be a blueprint for […]

Which of the following statements is incorrect regarding the marketing plan section of a business plan? A) The marketing plan focuses on how the business will market and sell its product or service. B) The two most important items to […]

Katlin Smith is investigating the feasibility of developing an iPhone app to help high school students with math. To get a good handle on the potential demand for her service, Katlin is scrounging around for information wherever she can find […]

The two components of industry/target market feasibility analysis are: A) industry status and target market status B) industry attractiveness and target market attractiveness C) industry sufficiency and target market demand D) industry attractiveness and product/service demand E) industry evolution and […]

As part of drumming up support for an IPO, the investment bank typically takes the top management team of the firm wanting to go public on a ________, which is a whirlwind tour that consists of meetings in key cities […]

The term of a utility patent is: A) 7 years from the date the patent is granted B) 15 years from the date of the initial application C) 15 years from the date the patent is granted D) 20 years […]

A hub and wheel configuration with a local firm at the hub organizing the interdependencies of a complex array of firms is referred to as a: A) trade association B) strategic alliance C) network D) joint venture E) consortia Answer: […]

The Savvy Entrepreneurial Firm feature in Chapter 2 focuses on Xhale and Vestagen, two entrepreneurial startups. While each firm is different and is successful in its own right, the main point of the feature is to illustrate that: A) entrepreneurial […]

________ is a financial transaction whereby a business sells its accounts receivable to a third party at a discount in exchange for cash. A) Factoring B) Vendor credit C) Peer-to-peer lending D) Crowdfunding E) Leasing Answer: Which of the following […]

According to the textbook, the toughest decisions regarding business growth are made in the ________ stage of the organizational life cycle. A) introduction B) early growth C) continuous growth D) maturity E) decline Answer: The people who buy franchises from […]

Some firms feel that they can better appeal to their customers if they can advertise that they are “the Number 1 firm” in their industry. This sentiment is motivated by the reason for growth labeled: A) economies of scope B) […]

A trademark is registered with the: A) U.S. Commerce Department B) Federal Trade Commission C) Securities and Exchange Commission D) Federal Patent, Copyright, and Trademark Office E) U.S. Patent and Trademark Office Answer: According to the textbook, one of the […]

The three ways to identify an opportunity include: A) observing trends, solving a problem, and finding gaps in the marketplace B) studying industry trade journals, talking to consumers, and solving a problem C) observing trends, conducting brainstorming sessions, and studying […]

A ________ is a place within a market segment that represents a narrower group of customers with similar interests. A) position market B) niche market C) slot market D) spot market E) gap market Answer: If a new venture organizes […]

Market leadership occurs when a firm is one of the top ten firms in an industry or niche market in terms of sales volume. Answer: A buying intentions survey is used to gauge customer interest in a product or service. […]

A mature industry is an industry that is experiencing slow increases in demand, numerous repeat customers, and limited product innovation. Answer: There are two components to product/service feasibility analysis: product/service desirability and total startup funds needed. Answer: FALSE The process […]

The five stages of the creative process include preparation, incubation, insight, evaluation, and elaboration. Answer: Prior entrepreneurial experience, relevant industry experience, and networking are attributes that strengthen the chances of a founder’s success. Answer: TRUE It is more likely that […]

Firms that pursue a global strategy use the same basic approach in all foreign markets. Answer: There are four factors that determine the threat of new entrants: number and balance of competitors, degree of difference between products, growth rate of […]

Entrepreneurs are usually moderate, rather than high, risk-takers. Answer: Many startups emphasize advertising over public relations primarily because it’s cheaper and helps build the firm’s credibility. Answer: FALSE Primary research is research that is collected by the person or persons […]

The management team and company structure section of a business plan is one of the lesser read sections. Answer: Licensing is the granting of permission by one company to another company to use a specific form of its intellectual property […]

The 1976 Copyright Revision Act governs copyright law in the United States. Answer: Variable costs are the costs a company incurs as it generates sales. Answer: TRUE A firm’s “position” is concerned with how it is situated relative to its […]

According to the opening feature on GiftZip, raising funding was the biggest challenge that Sam Hogg experienced in making his company a success. Answer: The percentage of the profits the venture capitalist gets is called the “carry.” Answer: TRUE A […]

If a firm’s debt-to-equity ratio gets too high, it may have trouble meeting its obligations and securing the level of financing needed to fuel its growth. Answer: A referent account is an early user of a firm’s product who is […]

Olive oil prepared in a small Italian oil press factory and sold by large supermarkets in the United States is an example of a ________. A) net national product B) U.S. export C) U.S. import D) gross domestic product Answer: […]

________ is the layer of corporate social responsibility in which a business builds social responsibility into its core operations to create value and build competitive advantage. A) Risk management B) Traditional philanthropy C) Strategic CSR D) Political polity Answer: Which […]

The international monetary system created by the Bretton Woods Agreement collapsed because ________. A) of its heavy dependence on the stability of the dollar B) it was not accepted by a majority of the world’s nations C) it did not […]

The rate at which one currency is interchanged for another is called the ________. A) exchange rate B) interbank interest rate C) official cash rate D) prime rate Answer: Which of the following is a contractual entry mode? A) wholly […]

Offering the same products using the same marketing strategy in all national markets of an organization is referred to as a ________ strategy. A) global B) retrenchment C) multinational D) blue ocean Answer: Which of the following methods will Happyland […]

If ABC Software simultaneously purchases and sells foreign exchange for two different dates, the company is said to be involved in ________. A) increasing its foreign exchange rate risk B) conducting a currency swap C) entering an arbitrage situation D) […]

Transactions involving the export of Happyland’s textile and computer products are included in its ________ account. A) capital B) merchandise C) services D) income payments Answer: Which of the following variables attempts to estimate market openness when creating a market-potential […]

A designated geographic region in which merchandise is allowed to pass with lower customs duties and/or fewer custom procedures is called a(n) ________. A) foreign trade zone B) free trade area C) single market D) open border Answer: The income-elasticity […]