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Test your basic knowledge |
Managerial Finance
Start Test
Study First
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.
cumulative
venture capital
public offering IPO
outstanding shares
2. High-risk - high-interest bonds
constant growth model
Angel Capitalists
junk bonds
conversion feature
3. 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.
treasury stock
principles of finance
mortgage bonds
annuity due
4. Preferred stock is preferred stock for which passed (unpaid) dividends do not accumulate.
zero growth model
treasury stock
venture capital
non-cumulative
5. Is included in nearly all corporate bond issues - gives the issuer the opportunity to repurchase bonds at a stated call price prior to maturity.
par value
required return
call feature
underwriting
6. Planning the long-term investments - $ coming in > $ going out
competitive bid
capital budgeting
No-par preferred stock
present value
7. Allows bondholders to change each bond into a stated number of shares of common stock
required return
venture capital
conversion feature
maturity risk
8. Estimates stock value by multiplying the firm's expected earnings per share (EPS) by the average price/earnings (P/E) ratio for the industry.
efficient markets
issued shares
p/e multiples
par value
9. Shares of ownership in a public corporation. The shareholder has voting rights in the corporation.
capital budgeting
underwriting
No-par preferred stock
common stock
10. 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?
working capital management
quarterly compounding
conversion feature
'best-efforts'
11. Price of assets traded fully reflect all available information - and investors must be rational
outstanding shares
discount
required return
efficient markets
12. Is an annuity for which the cash flow occurs at the beginning of each period.
junk bonds
constant growth model
annuity due
'best-efforts'
13. Issued shares of common stock held by the firm; often these shares have been repurchased by the firm.
future value
private placement
'best-efforts'
treasury stock
14. All else equal - the longer the time to maturity - the greater the interest rate risk to the investor
maturity risk
preferred stock
public offering seasoned
dividends
15. 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)
compound interest
underwriting
non-cumulative
preferred stock
16. An unsecured type of bond that pays interest only when the debtor company has positive earnings.
bond rating agencies
principles of finance
coupon interest rate
income bonds
17. A potential conflict of interest between outside shareholders (owners) and managers who make decisions about how to operate the firm.
annuity
treasury stock
agency problems
par value
18. Are provisions in a bond indenture that place operating and financial constraints on the borrower
annuity due
the Goal of a Corporation
restrictive covenants
future value
19. Investors bid to buy shares - risk is on corporation
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20. First time selling stock - indirectly with financial intermediary - indirectly with investment bank
cumulative
time Value of money
preferred stock
public offering IPO
21. A rising trend in the prices of most goods and services
restrictive covenants
p/e multiples
venture capitalist
inflation
22. A portion of a security registration statement that describes the key aspects of the issue - the issuer - and its management and financial position
underwriting
cumulative
prospectus
private placement
23. 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.
income bonds
authorized shares
underwriting
private placement
24. 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.
nominal rate of interest
prospectus
Angel Capitalists
No-par preferred stock
25. The actual rate of interest charged by the supplier of funds and paid by the demander
public offering seasoned
nominal rate of interest
prospectus
venture capital
26. A bond that a corporation issues to raise money to expand its business
preemptive right
negotiated purchase
income bonds
corporate bond
27. Ownership in a Corporation (stock)
equity
prospectus
preemptive right
bond rating agencies
28. Is interest that is earned on a given deposit and has become part of the principal at the end of a specified period.
dividends
compound interest
negotiated purchase
future value
29. 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.
interest rate
p/e multiples
future value
efficient markets
30. The risk that a company will be unable to pay the bond's face amount or interest payments as it becomes due.
default risk
zero growth model
competitive bid
junk bonds
31. Investment bank underwrites issuance - risk is on the investment bank - bid on shares
future value
real rate of interest
competitive bid
capital structure
32. Is preferred stock with no stated face value but with a stated annual dollar dividend
No-par preferred stock
par value
private placement
semi-annual compounding
33. Type of bonds representing property put up as collateral
mortgage bonds
quarterly compounding
the Goal of a Corporation
bond indenture
34. Investment bank does not underwrite - risk is on corporation
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35. Is usually applied to equity instruments such as common stock; the cost of funds obtained by selling an ownership interest.
annuity
Par-value preferred stock
proxy statement
required return
36. Allows common stockholders to maintain their proportionate ownership in the corporation when new shares are issued - thus protecting them from dilution of their ownership.
the Goal of a Corporation
negotiated purchase
preemptive right
maturity 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.
venture capitalist
non-cumulative
public offering seasoned
issued shares
38. The percentage of a bond's par value that will be paid annually - typically in two equal semiannual payments - as interest.
bond indenture
preferred stock
discount
coupon interest rate
39. Investment bank underwrites issuance - risk is on the investment bank
compound interest
Par-value preferred stock
public offering IPO
negotiated purchase
40. 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
common stock
preferred stock
mortgage bonds
cumulative
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.
the Goal of a Corporation
'dutch-auction'
authorized shares
capital structure
42. A statement transferring the votes of a stockholder to another party
outstanding shares
equity
proxy statement
coupon interest rate
43. Is preferred stock with a stated face value that is used with the specified dividend percentage to determine the annual dollar dividend.
dividends
annuity
private placement
Par-value preferred stock
44. Inflation - opportunity cost - risk
public offering IPO
outstanding shares
time Value of money
default risk
45. 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
trustee
annuity
issued shares
coupon interest rate
46. Periodic payments of profit to the shareholders
working capital management
'best-efforts'
No-par preferred stock
dividends
47. Assumes that the stock will pay the same dividend each year - year after year
the Goal of a Corporation
zero growth model
bond rating agencies
maturity risk
48. Is a complex and lengthy legal document stating the conditions under which a bond has been issued.
constant growth model
non-cumulative
public offering IPO
bond indenture
49. Money flows directly from investor to corporation - $ flows from investor to corp through an investment bank ('privileged subscription')
private placement
the Goal of a Corporation
compound interest
efficient markets
50. 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.
working capital management
Par-value preferred stock
No-par preferred stock
interest rate