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






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






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






4. When interest is credited twice a year.






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






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






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






8. Selling stock anytime after initial time






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






10. 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.






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






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






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






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






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






16. 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






17. Periodic payments of profit to the shareholders






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






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






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






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






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






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






24. Type of bonds representing property put up as collateral






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






26. 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.






27. 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






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






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






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






31. 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.






32. 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?






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






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






35. Interest compounds four times per year.






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






37. Ownership in a Corporation (stock)






38. 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.






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






40. Inflation - opportunity cost - risk






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






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






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






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






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






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






47. 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.






48. 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.






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


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