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Managerial Finance

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. A portion of a security registration statement that describes the key aspects of the issue - the issuer - and its management and financial position






2. 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.






3. Privately raised external equity capital used to fund early-stage firms with attractive growth prospects.






4. First time selling stock - indirectly with financial intermediary - indirectly with investment bank






5. A rising trend in the prices of most goods and services






6. Wealthy individual investors who do not operate as a business but invest in promising early-stage companies in exchange for a portion of the firm's equity.






7. 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?






8. Type of bonds representing property put up as collateral






9. Is interest that is earned on a given deposit and has become part of the principal at the end of a specified period.






10. Periodic payments of profit to the shareholders






11. 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






12. The risk that a company will be unable to pay the bond's face amount or interest payments as it becomes due.






13. Shares of ownership in a public corporation. The shareholder has voting rights in the corporation.






14. Are provisions in a bond indenture that place operating and financial constraints on the borrower






15. 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.






16. The rate that creates equilibrium between the supply of savings and the demand for investment funds in a perfect world - without inflation - where suppliers and demanders of funds have no liquidity preferences and there is no risk






17. Is preferred stock with no stated face value but with a stated annual dollar dividend






18. Mixture of debt and equity to finance long-term investments






19. High-risk - high-interest bonds






20. When interest is credited twice a year.






21. Inflation - opportunity cost - risk






22. Assumes that the stock will pay the same dividend each year - year after year






23. 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.






24. Allows common stockholders to maintain their proportionate ownership in the corporation when new shares are issued - thus protecting them from dilution of their ownership.






25. Estimates stock value by multiplying the firm's expected earnings per share (EPS) by the average price/earnings (P/E) ratio for the industry.






26. Interest on an annual basis deducted in advance on a loan






27. The percentage of a bond's par value that will be paid annually - typically in two equal semiannual payments - as interest.






28. Investment bank underwrites issuance - risk is on the investment bank - bid on shares






29. Selling stock anytime after initial time






30. Interest compounds four times per year.






31. Authorized shares are the shares of common stock that a firm's corporate charter allows it to issue.






32. Agencies that assess the 'credit worthiness' of an organization. The two major rating agencies are Moody's and Standard & Poor.






33. Providers of venture capital; typically - formal businesses that maintain strong oversight over the firms they invest in and that have clearly defined exit strategies.






34. All else equal - the longer the time to maturity - the greater the interest rate risk to the investor






35. 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.






36. A statement transferring the votes of a stockholder to another party






37. Money has a time value - Risk requires a reward - Cash flow is what matters - Market prices are generally correct - and Conflicts of interest create agency problems.






38. Issued shares of common stock held by the firm; often these shares have been repurchased by the firm.






39. 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.






40. Allows bondholders to change each bond into a stated number of shares of common stock






41. Is included in nearly all corporate bond issues - gives the issuer the opportunity to repurchase bonds at a stated call price prior to maturity.






42. Planning the long-term investments - $ coming in > $ going out






43. Money flows directly from investor to corporation - $ flows from investor to corp through an investment bank ('privileged subscription')






44. Is a complex and lengthy legal document stating the conditions under which a bond has been issued.






45. Is preferred stock with a stated face value that is used with the specified dividend percentage to determine the annual dollar dividend.






46. An unsecured type of bond that pays interest only when the debtor company has positive earnings.






47. Investors bid to buy shares - risk is on corporation

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48. Investment bank underwrites issuance - risk is on the investment bank






49. Is usually applied to equity instruments such as common stock; the cost of funds obtained by selling an ownership interest.






50. A bond that a corporation issues to raise money to expand its business







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