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






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






4. 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






5. 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.






6. 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.






7. 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.






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






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






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






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






12. 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.






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






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






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






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






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






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






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






20. 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.






21. Ownership in a Corporation (stock)






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






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






24. 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






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






26. Type of bonds representing property put up as collateral






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






28. 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






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






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






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






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






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






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






35. 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.






36. 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?






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






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






39. Inflation - opportunity cost - risk






40. High-risk - high-interest bonds






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






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






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






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






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






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






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






48. 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.






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






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







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