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






2. When interest is credited twice a year.






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






4. Interest compounds four times per year.






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






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. 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)






8. 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






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






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






11. 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.






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






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






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






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






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






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






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






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






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






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






22. Periodic payments of profit to the shareholders






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






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






25. 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.






26. 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






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






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






29. Type of bonds representing property put up as collateral






30. 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?






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






32. Ownership in a Corporation (stock)






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






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






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






36. High-risk - high-interest bonds






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






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






39. Selling stock anytime after initial time






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






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






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

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






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

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






46. 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.






47. 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.






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






49. Inflation - opportunity cost - risk






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