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






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






3. Inflation - opportunity cost - risk






4. Selling stock anytime after initial time






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






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






7. Type of bonds representing property put up as collateral






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






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






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






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






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






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






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






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






16. 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.






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

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






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






20. 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.






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






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






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






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






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






26. Interest compounds four times per year.






27. 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?






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






29. 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.






30. 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.






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






32. Ownership in a Corporation (stock)






33. 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.






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






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






36. 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.






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






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






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






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






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






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






43. 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






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






45. 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)






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






47. 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.






48. Periodic payments of profit to the shareholders






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

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50. High-risk - high-interest bonds