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






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






3. Type of bonds representing property put up as collateral






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






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






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






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






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






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






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






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






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






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






14. Ownership in a Corporation (stock)






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






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






17. Periodic payments of profit to the shareholders






18. 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.






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






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






21. 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.






22. 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?






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






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






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






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






27. 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.






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






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






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






31. 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






32. 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






33. Interest compounds four times per year.






34. High-risk - high-interest bonds






35. An unsecured type of bond that pays interest only when the debtor company has positive earnings.






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






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






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






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






40. 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.






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






42. 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.






43. 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.






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






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)






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






47. 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






48. 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.






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






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