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Test your basic knowledge |
Managerial Finance
Start Test
Study First
Subject
:
business-skills
Instructions:
Answer 50 questions in 15 minutes.
If you are not ready to take this test, you can
study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Issued shares of common stock held by investors - this includes private and public investors.
venture capital
outstanding shares
dividends
preferred stock
2. Is preferred stock with no stated face value but with a stated annual dollar dividend
No-par preferred stock
Angel Capitalists
treasury stock
nominal rate of interest
3. Providers of venture capital; typically - formal businesses that maintain strong oversight over the firms they invest in and that have clearly defined exit strategies.
quarterly compounding
dividends
competitive bid
venture capitalist
4. The risk that a company will be unable to pay the bond's face amount or interest payments as it becomes due.
default risk
dividends
negotiated purchase
p/e multiples
5. Stock is an arbitrary value established for legal purposes in the firm's corporate charter - and can be used to find the total number of shares outstanding by dividing it into the book value of common stock.
par value
'best-efforts'
venture capitalist
'dutch-auction'
6. The role of the investment banker in bearing the risk of reselling - at a profit - the securities purchased from an issuing corporation at an agreed-on price.
outstanding shares
capital budgeting
junk bonds
underwriting
7. Agencies that assess the 'credit worthiness' of an organization. The two major rating agencies are Moody's and Standard & Poor.
constant growth model
nominal rate of interest
default risk
bond rating agencies
8. Investors bid to buy shares - risk is on corporation
9. Investment bank underwrites issuance - risk is on the investment bank
restrictive covenants
compound interest
nominal rate of interest
negotiated purchase
10. Is an annuity for which the cash flow occurs at the beginning of each period.
authorized shares
working capital management
annuity due
efficient markets
11. Day to day operations - how much cash to keep on hand - how much inventory to keep on hand - will we allow to buy on credit?
Angel Capitalists
income bonds
working capital management
present value
12. A portion of a security registration statement that describes the key aspects of the issue - the issuer - and its management and financial position
Par-value preferred stock
venture capital
principles of finance
prospectus
13. Issued shares of common stock held by the firm; often these shares have been repurchased by the firm.
p/e multiples
treasury stock
No-par preferred stock
zero growth model
14. A widely cited dividend valuation approach that assumes that dividends will grow at a constant rate - but a rate that is less than the required return.
annuity due
Par-value preferred stock
constant growth model
'dutch-auction'
15. The process of finding present values; the inverse of compounding interest
No-par preferred stock
proxy statement
zero growth model
discounting cash flows
16. Interest on an annual basis deducted in advance on a loan
nominal rate of interest
discount
'dutch-auction'
venture capital
17. Is preferred stock with a stated face value that is used with the specified dividend percentage to determine the annual dollar dividend.
discounting cash flows
non-cumulative
maturity risk
Par-value preferred stock
18. Is a complex and lengthy legal document stating the conditions under which a bond has been issued.
bond indenture
real rate of interest
nominal rate of interest
principles of finance
19. Preferred stock is preferred stock for which passed (unpaid) dividends do not accumulate.
issued shares
'best-efforts'
non-cumulative
real rate of interest
20. The current dollar value of a future amount - the amount of money that would have to be invested today at a given interest rate over a specified period to equal the future amount.
discount
present value
annuity
treasury stock
21. Periodic payments of profit to the shareholders
dividends
coupon interest rate
agency problems
trustee
22. Privately raised external equity capital used to fund early-stage firms with attractive growth prospects.
underwriting
venture capital
discounting cash flows
call feature
23. Mixture of debt and equity to finance long-term investments
capital structure
trustee
the Goal of a Corporation
dividends
24. Shares of ownership in a public corporation. The shareholder has voting rights in the corporation.
required return
common stock
Angel Capitalists
preferred stock
25. Type of bonds representing property put up as collateral
inflation
venture capital
mortgage bonds
prospectus
26. Is a stream of equal periodic cash flows - over a specified time period. These cash flows can be inflows of returns earned on investments or outflows of funds invested to earn future returns.
time Value of money
annuity
capital structure
agency problems
27. Estimates stock value by multiplying the firm's expected earnings per share (EPS) by the average price/earnings (P/E) ratio for the industry.
issued shares
required return
No-par preferred stock
p/e multiples
28. Allows common stockholders to maintain their proportionate ownership in the corporation when new shares are issued - thus protecting them from dilution of their ownership.
corporate bond
preemptive right
public offering seasoned
underwriting
29. A potential conflict of interest between outside shareholders (owners) and managers who make decisions about how to operate the firm.
competitive bid
issued shares
agency problems
real rate of interest
30. A paid individual - corporation - or commercial bank trust department that acts as the third party to a bond indenture and can take specified actions on behalf of the bondholders if the terms of the indenture are violated
time Value of money
annuity
present value
trustee
31. The percentage of a bond's par value that will be paid annually - typically in two equal semiannual payments - as interest.
call feature
coupon interest rate
constant growth model
No-par preferred stock
32. Inflation - opportunity cost - risk
discounting cash flows
preemptive right
time Value of money
principles of finance
33. An unsecured type of bond that pays interest only when the debtor company has positive earnings.
income bonds
discount
'dutch-auction'
inflation
34. High-risk - high-interest bonds
efficient markets
junk bonds
competitive bid
treasury stock
35. Is usually applied to equity instruments such as common stock; the cost of funds obtained by selling an ownership interest.
corporate bond
issued shares
call feature
required return
36. Authorized shares are the shares of common stock that a firm's corporate charter allows it to issue.
authorized shares
'dutch-auction'
principles of finance
junk bonds
37. Allows bondholders to change each bond into a stated number of shares of common stock
competitive bid
conversion feature
treasury stock
restrictive covenants
38. Preferred stock is preferred stock for which all passed (unpaid) dividends in arrears - along with the current dividend - must be paid before dividends can be paid to common stockholders
inflation
'dutch-auction'
annuity due
cumulative
39. Stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold.(not voted)
interest rate
treasury stock
preferred stock
dividends
40. Investment bank underwrites issuance - risk is on the investment bank - bid on shares
call feature
public offering IPO
preferred stock
competitive bid
41. Is interest that is earned on a given deposit and has become part of the principal at the end of a specified period.
conversion feature
dividends
compound interest
real rate of interest
42. A bond that a corporation issues to raise money to expand its business
corporate bond
capital structure
trustee
coupon interest rate
43. When interest is credited twice a year.
venture capitalist
junk bonds
mortgage bonds
semi-annual compounding
44. The value at a given future date of an amount placed on deposit today and earning interest at a specified rate. Found by applying compound interest over a specified period of time.
future value
corporate bond
efficient markets
discount
45. Is usually applied to debt instruments such as bank loans or bonds; the compensation paid by the borrower of funds to the lender; from the borrower's point of view - the cost of borrowing funds.
bond rating agencies
interest rate
the Goal of a Corporation
negotiated purchase
46. Selling stock anytime after initial time
competitive bid
venture capitalist
quarterly compounding
public offering seasoned
47. Money flows directly from investor to corporation - $ flows from investor to corp through an investment bank ('privileged subscription')
non-cumulative
private placement
compound interest
principles of finance
48. The actual rate of interest charged by the supplier of funds and paid by the demander
nominal rate of interest
private placement
interest rate
real rate of interest
49. First time selling stock - indirectly with financial intermediary - indirectly with investment bank
public offering IPO
constant growth model
junk bonds
preemptive right
50. Planning the long-term investments - $ coming in > $ going out
compound interest
capital budgeting
venture capital
coupon interest rate