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






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






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






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






5. 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.






6. 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.






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






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


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






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






11. 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?






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






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






14. 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.






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






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






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






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






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






20. 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.






21. Periodic payments of profit to the shareholders






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






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






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






25. Type of bonds representing property put up as collateral






26. 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.






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






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






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






30. 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






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






32. Inflation - opportunity cost - risk






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






34. High-risk - high-interest bonds






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






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






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






38. 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






39. 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)






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






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






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






43. When interest is credited twice a year.






44. 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.






45. 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.






46. Selling stock anytime after initial time






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






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






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






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