Test your basic knowledge |

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. Type of bonds representing property put up as collateral






2. Issued shares of common stock held by investors - this includes private and public investors.






3. Shares of common stock that have been put into circulation. - = outstanding shares + treasury stock






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






5. 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?






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






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






8. 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.






9. Investment bank does not underwrite - risk is on corporation


10. Preferred stock is preferred stock for which passed (unpaid) dividends do not accumulate.






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






12. 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.






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






14. The actual rate of interest charged by the supplier of funds and paid by the demander






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






16. Interest compounds four times per year.






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






18. Price of assets traded fully reflect all available information - and investors must be rational






19. 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)






20. 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.






21. 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






22. Selling stock anytime after initial time






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






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






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






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






27. 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.






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






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






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






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






32. 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






33. 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.






34. The process of finding present values; the inverse of compounding interest






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






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






37. 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.






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






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






40. 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.






41. When interest is credited twice a year.






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






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






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






45. Ownership in a Corporation (stock)






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






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






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


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






50. Inflation - opportunity cost - risk