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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. Shares of common stock that have been put into circulation. - = outstanding shares + treasury stock
future value
issued shares
No-par preferred stock
preemptive right
2. The risk that a company will be unable to pay the bond's face amount or interest payments as it becomes due.
call feature
working capital management
default risk
Angel Capitalists
3. Inflation - opportunity cost - risk
principles of finance
time Value of money
common stock
nominal rate of interest
4. Selling stock anytime after initial time
public offering seasoned
semi-annual compounding
capital budgeting
Angel Capitalists
5. A rising trend in the prices of most goods and services
bond rating agencies
non-cumulative
interest rate
inflation
6. The percentage of a bond's par value that will be paid annually - typically in two equal semiannual payments - as interest.
corporate bond
coupon interest rate
efficient markets
interest rate
7. Type of bonds representing property put up as collateral
compound interest
preemptive right
par value
mortgage bonds
8. Shares of ownership in a public corporation. The shareholder has voting rights in the corporation.
common stock
trustee
underwriting
negotiated purchase
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.
preemptive right
principles of finance
annuity
equity
10. Is interest that is earned on a given deposit and has become part of the principal at the end of a specified period.
quarterly compounding
compound interest
preferred stock
call feature
11. Mixture of debt and equity to finance long-term investments
capital structure
preemptive right
corporate bond
annuity
12. First time selling stock - indirectly with financial intermediary - indirectly with investment bank
Par-value preferred stock
semi-annual compounding
required return
public offering IPO
13. Assumes that the stock will pay the same dividend each year - year after year
common stock
default risk
zero growth model
quarterly compounding
14. A portion of a security registration statement that describes the key aspects of the issue - the issuer - and its management and financial position
private placement
annuity
bond rating agencies
prospectus
15. Agencies that assess the 'credit worthiness' of an organization. The two major rating agencies are Moody's and Standard & Poor.
cumulative
'dutch-auction'
time Value of money
bond rating agencies
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.
principles of finance
conversion feature
Angel Capitalists
maturity risk
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.
required return
working capital management
Angel Capitalists
default risk
19. Are provisions in a bond indenture that place operating and financial constraints on the borrower
restrictive covenants
private placement
discount
bond rating agencies
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.
junk bonds
annuity
working capital management
capital structure
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.
p/e multiples
efficient markets
negotiated purchase
treasury stock
22. Is preferred stock with a stated face value that is used with the specified dividend percentage to determine the annual dollar dividend.
par value
conversion feature
Par-value preferred stock
efficient markets
23. Money flows directly from investor to corporation - $ flows from investor to corp through an investment bank ('privileged subscription')
junk bonds
mortgage bonds
private placement
proxy statement
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.
call feature
interest rate
negotiated purchase
preferred stock
25. Issued shares of common stock held by the firm; often these shares have been repurchased by the firm.
annuity due
treasury stock
common stock
bond rating agencies
26. Interest compounds four times per year.
quarterly compounding
agency problems
restrictive covenants
nominal rate of interest
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?
nominal rate of interest
maturity risk
p/e multiples
working capital management
28. Allows bondholders to change each bond into a stated number of shares of common stock
present value
conversion feature
issued shares
'dutch-auction'
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.
bond indenture
principles of finance
private placement
working capital management
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.
discount
present value
the Goal of a Corporation
public offering IPO
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.
venture capitalist
'dutch-auction'
private placement
required return
32. Ownership in a Corporation (stock)
authorized shares
future value
real rate of interest
equity
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.
future value
public offering seasoned
real rate of interest
preemptive right
34. Interest on an annual basis deducted in advance on a loan
semi-annual compounding
discount
bond indenture
public offering IPO
35. Price of assets traded fully reflect all available information - and investors must be rational
default risk
efficient markets
'best-efforts'
semi-annual compounding
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.
interest rate
default risk
present value
constant growth model
37. Planning the long-term investments - $ coming in > $ going out
private placement
default risk
efficient markets
capital budgeting
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
default risk
non-cumulative
constant growth model
cumulative
39. Investment bank underwrites issuance - risk is on the investment bank
trustee
par value
negotiated purchase
underwriting
40. Is an annuity for which the cash flow occurs at the beginning of each period.
outstanding shares
public offering IPO
mortgage bonds
annuity due
41. Investment bank underwrites issuance - risk is on the investment bank - bid on shares
venture capitalist
competitive bid
equity
restrictive covenants
42. Authorized shares are the shares of common stock that a firm's corporate charter allows it to issue.
authorized shares
required return
principles of finance
Par-value preferred stock
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
real rate of interest
discount
underwriting
p/e multiples
44. Issued shares of common stock held by investors - this includes private and public investors.
private placement
cumulative
conversion feature
outstanding shares
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)
present value
preferred stock
public offering IPO
maturity risk
46. Preferred stock is preferred stock for which passed (unpaid) dividends do not accumulate.
non-cumulative
corporate bond
cumulative
underwriting
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.
equity
time Value of money
par value
annuity due
48. Periodic payments of profit to the shareholders
proxy statement
principles of finance
dividends
conversion feature
49. Investors bid to buy shares - risk is on corporation
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50. High-risk - high-interest bonds
outstanding shares
public offering IPO
junk bonds
Angel Capitalists