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Exam 18: Financial Management

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Question 131

Multiple Choice

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___________ offer short-term secured loans to high-risk borrowers.These loans usually require collateral.

A) Commercial finance companies
B) Reserve banks
C) Credit brokers
D) Investment bankers

E) B) and C)
F) C) and D)

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Question 132

Multiple Choice

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Robert intends to major in business.He has never had much interest in subjects with numbers.He would like to avoid taking any finance courses if possible.Robert should:

A) avoid finance courses and focus on subjects that he enjoys.
B) take a finance course to satisfy graduation requirements.
C) realize that his success in business requires an understanding of financial issues.
D) change majors and go into the arts.

E) A) and B)
F) B) and C)

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Question 133

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Explain the role the operating budget,the capital budget,and the cash budget play in financial planning.

Undercapitalization refers to the problem of:

Although best used as a last resort,many small businesses find it convenient to use __________ as a short-term source of financing.Although this form short-term debt comes with high interest rates,it provides a quick line of credit for many firms,including start-up companies who may not be able to secure bank loans.

Based on the time value of money,$100 received a year from today is worth more than $100 received today.

Equity financing refers to the money a firm receives from the sale of bonds.

The first time a company offers to sell its stock to the general public is called an initial private label IPL).

Inability to attract and retain qualified employees is one of the most common ways for a firm to fail financially.

Which of the following provides the buyer with collateral?

Financial managers generally oppose credit sales because of the impact on cash flows.

A financial manager makes recommendations to top executives regarding strategies for improving the financial strength of a firm.

When Preferred Pet Care Inc,a mobile veterinary care company,first started operations,it extended three months of credit to customers.It soon began to experience a cash flow problem.A finance professional was hired to:

The Spotlight on Small Business box titled,"Exploring the Financing Universe,"

A promissory note that requires the borrower to repay the loan in specified installments is called an) :

The CFO of a well known satellite radio company was trying to work his magic today as he solicited another telecommunications/entertainment company to invest in his company in order to prevent bankruptcy.Having refinanced the company less than a year ago,the satellite radio finance manager had a $75 million note coming due today.The current financing arrangement represents:

Which of the following represents a capital expenditure?

While finance is a critical activity for profit-seeking organizations,by definition nonprofit organizations are not required to fulfill the finance function.

One of the most common ways for a firm to fail financially is poor control over cash flow.

Equity financing must be repaid.