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Exam 16: Mastering Financial Management

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Question 111

Multiple Choice

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A term-loan agreement requires a borrower to repay the loan

A) in monthly, quarterly, semiannual, or annual installments.
B) at the end of the second year.
C) at the end of the third year.
D) at the end of the fourth year.
E) at the end of the fifth to seventh year.

F) B) and C)
G) All of the above

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Question 112

True/False

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Bonds that can be exchanged for a specified number of shares of common stock are called convertible bonds.

A) True
B) False

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Question 113

Multiple Choice

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Commercial paper usually is issued

Debbie Brooks purchased a $1,000 corporate bond that pays 9 percent interest. The face value of her bond is $1,000. What is the amount of interest that she will receive each year?

The legal document detailing all the conditions relating to a bond issue is called a bond indenture.

McGines, Inc. Sam McGines, CEO of McGines, Inc., decided that upon his retirement, he would elect his son Derrick to become the new CEO. Sam thought it would be a good idea to have Derrick shadow him at work to understand the roles and responsibilities of a CEO. Derrick shadowed his father for months in order to learn every aspect of the business. Sam knew that the best way for Derrick to learn was to actually perform some of the tasks he did on a daily basis, rather than simply describe them. The company generally focused on short-term financing, and Sam felt that it was important for Derrick to understand the different types of financing. Derrick learned about the type of bonds that the company usually offered to raise capital. These bonds allow the purchasers of the bond to keep them until maturity. Derrick also learned the process of obtaining bonds and the various types of long-term financing methods. Job shadowing was indeed a worthwhile experience for Derrick. -Refer to McGines, Inc. From his work experience, Derrick should have learned that ____ has a repayment period of thirty to sixty days.

​Barrett, the president of Barrett, Inc., has executed a ____. The terms of the Barrett, Inc. promissory note require the corporation to repay the loan in monthly installments.

Baxter Equipment earned $300,000 last year. Its owners' equity totaled $2,500,000. Based on these amounts, what is the firm's return on owners' equity?

Each year Caliente, Inc., follows a budgeting process. The first step is always to look at the previous year's budget and see if anything needs to be updated. Caliente uses ____ budgeting.

All of the following would be considered appropriate collateral for a long-term loan except

When a firm makes annual deposits to repay bondholders at maturity, it is using a

Which of the following is not a financial reform regulation proposed by the U.S. House of Representatives and Senate as a reaction to the economic crisis?

Venture capital firms invest in

What is speculative production and how does it impact a firm's financial planning?

Suppose IBM decided to issue commercial paper in denominations of $5,000 to raise a large sum of money. Since the commercial paper is secured only by IBM's reputation,

The board of directors of a corporation usually is elected by

To raise capital, Financial Fusion sold

Casey Broadway's responsibility at his company is overseeing all the activities concerned with obtaining money and using it effectively. Casey is a(n)

All of the following are uses of long-term financing except

A factor will buy accounts receivable for