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Managerial Finance

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. 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






2. 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?






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






4. 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.






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






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






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






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






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






10. Type of bonds representing property put up as collateral






11. 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.






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

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13. 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.






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






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






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






17. Selling stock anytime after initial time






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






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






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






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






22. 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.






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






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






25. 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)






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






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






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






29. 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.






30. Ownership in a Corporation (stock)






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






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






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






34. Periodic payments of profit to the shareholders






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






36. 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






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






38. Interest compounds four times per year.






39. 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.






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






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






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






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






44. High-risk - high-interest bonds






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






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






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






48. 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.






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






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







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