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






2. 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






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






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






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






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






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

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8. 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.






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






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






11. 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.






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






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






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






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






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






17. 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.






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






19. Type of bonds representing property put up as collateral






20. Interest compounds four times per year.






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






22. 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.






23. 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.






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






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






26. Ownership in a Corporation (stock)






27. 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






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






29. Is an annuity for which the cash flow occurs at the beginning of each period.






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






31. A potential conflict of interest between outside shareholders (owners) and managers who make decisions about how to operate the firm.






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






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






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






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






36. 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.






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






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






39. High-risk - high-interest bonds






40. 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






41. Create wealth for the shareholders through maximizing the value of the firm by making financial decisions that will increase the price of common stock.






42. Inflation - opportunity cost - risk






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






44. When interest is credited twice a year.






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






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






47. Periodic payments of profit to the shareholders






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

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






50. 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?







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