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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. When interest is credited twice a year.






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






3. Ownership in a Corporation (stock)






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






5. Periodic payments of profit to the shareholders






6. 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.






7. 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.






8. 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






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

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






11. Inflation - opportunity cost - risk






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






13. 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.






14. Type of bonds representing property put up as collateral






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






16. Interest compounds four times per year.






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






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






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






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






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






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






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






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






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






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






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






29. Selling stock anytime after initial time






30. 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.






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






32. 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.






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






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






35. 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






36. 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)






37. 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.






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






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

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






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






42. 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.






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






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






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






46. 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?






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






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






49. 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.






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







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