Question 1 1 / 1 point
The major areas included in the study of finance are financial markets, investments, financial services, and managerial finance.
Question options:
True
False
Question 2 1 / 1 point
Coordination of the finance function and the marketing function is critical to the success of newly formed companies which must generate enough cash to survive
Question options:
True
False
Question 3 1 / 1 point
The well-developed financial markets that exist in the United States have allowed us to achieve a higher standard of living than would otherwise be possible.
Question options:
True
False
Question 4 1 / 1 point
Companies can issue different classes of common stock. Which of the following statements concerning stock classes is correct?
Question options:
a) All common stocks fall into one of three classes: A, B, and C.
b) Most firms have several classes of common stock outstanding.
c) All common stock, regardless of class, must have voting rights.
d) All common stock, regardless of class, must have the same dividend privileges.
e) None of the above statements is necessarily true.
Question 5 1 / 1 point
Of the following provisions that might be found in a bond indenture, which would tend to reduce the coupon interest rate on the bond in question?
Question options:
a) A subordination clause in a debenture.
b) A call provision.
c) A convertible feature.
d) Having relatively few restrictive covenants.
e) All of the above.
Question 6 1 / 1 point
What major factor(s) led to the U.S. economic woes which started in 2007?
Question options:
a) U.S. overseas military engagements.
b) A decline in real estate values which resulted in increased mortgage defaults and foreclosures and a decline in financial markets.
c) The European economic crisis.
d) Inflation and manufacturing outsourcing.
e) None of the above.
Question 7 1 / 1 point
An American Depository Receipt (ADR) represents
Question options:
a) Debt sold by a foreign borrower that is denominated in the currency of the country where it is sold.
b) Stock of foreign companies that is sold directly to investors in the United States.
c) Equity instruments of one country that are sold in another country.
d) The certificates that represent ownership in foreign companies that are sold in the United States.
e) Certificates representing ownership in stocks of foreign companies that are held in trust by a bank located in the country the stock is traded.
Question 8 1 / 1 point
A basic knowledge of finance will help you with your personal investments by helping you understand
Question options:
a) how to accurately predict changes in the short term interest rates.
b) how to determine the optimal dividend policy for each firm.
c) how to determine which technology is most likely to be accepted by consumers.
d) how to review companies and industries to determine their prospects for future growth and the risk inherent in those companies and industries.
e) how to predict the growth in sales for the firm.
Question 9 1 / 1 point
Assume the securities are all issued by the same firm. From the investor's standpoint, rank the following securities in order of increasing risk (the number of the least risky security is placed first, or to the left, in the answer set).
(1) Preferred stock.
(2) Income bonds.
(3) Convertible preferred stock.
(4) Mortgage bonds.
Question options:
a) 1, 2, 3, 4
b) 4, 1, 2, 3
c) 4, 1, 3, 2
d) 4, 2, 1, 3
e) 4, 2, 3, 1
Question 10 1 / 1 point
The average American is knowledgeable about personal finance and tends to manage their retirement needs and debt levels responsibly.
Question options:
True
False
Question 11 1 / 1 point
In general, the role of the financial manager is to plan for the acquisition and use of funds in order to maximize the value of the firm.
Question options:
True
False
Question 12 1 / 1 point
Which of the following are NOT factors that have made the trend toward globalization mandatory for many businesses?
Question options:
a) Lower trade barriers
b) Demand for high-quality, low-cost products
c) Increased volatility of exchange rates for foreign currency
d) Increased development costs
e) Improvements in transportation and communications.
Question 13 1 / 1 point
In the early 1900s the emphasis of managerial finance was on the legal aspects of mergers, the formation of new firms, and the various types of securities firms could issue to raise funds.
Question options:
True
False
Question 14 1 / 1 point
Why is it important for persons in marketing, accounting, production, and other areas in the firm to understand finance?
Question options:
a) Funds availability affects the firm's ability to increase inventory, change plant capacity, and so forth.
b) Financial decisions are based on data provided by other functional areas of the firm; thus, it is in the best interests of such areas to provide the most optimistic information possible so that their projects seem most favorable.
c) There is a good chance persons in marketing, accounting, production, and other areas will have to work in the finance area someday if they want to move up the corporate ladder.
d) Payments of salaries and other expenses always pass through the finance area of the firm.
e) All of the above are correct answers.
Question 15 1 / 1 point
At the beginning of the twentieth century, for the most part, the only investments available to individual investors were corporate stocks and bonds; but, today, there are a significantly greater number of investment choices because investors' demands have changed.
Question options:
True
False
Question 16 1 / 1 point
The study of finance consists of three areas⎯financial markets, investments, and managerial finance⎯that are basically independent of each other, because you can be an expert in one area without having knowledge of the other two.
Question options:
True
False
Question 17 1 / 1 point
An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a(n)
Question options:
a) Call option.
b) Put option.
c) Out-of-the-money option.
d) Naked option.
e) Covered option.
Question 18 1 / 1 point
During the 1930s, investment experts suggested that stock value should be determined by computing the present value of the future cash flows associated with the stock.
Question options:
True
False
Question 19 1 / 1 point
Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?
Question options:
a) reduction in market interest rates.
b) The company's bonds are downgraded.
c) An increase in the call premium.
d) Answers a and b are both correct.
Question 20 1 / 1 point
The history of banking in the United States is one of continuous regulation to ensure the safety of our banking institution. For this reason, little deregulation has taken place.
Question options:
True
False
The major areas included in the study of finance are financial markets, investments, financial services, and managerial finance.
Question options:
True
False
Question 2 1 / 1 point
Coordination of the finance function and the marketing function is critical to the success of newly formed companies which must generate enough cash to survive
Question options:
True
False
Question 3 1 / 1 point
The well-developed financial markets that exist in the United States have allowed us to achieve a higher standard of living than would otherwise be possible.
Question options:
True
False
Question 4 1 / 1 point
Companies can issue different classes of common stock. Which of the following statements concerning stock classes is correct?
Question options:
a) All common stocks fall into one of three classes: A, B, and C.
b) Most firms have several classes of common stock outstanding.
c) All common stock, regardless of class, must have voting rights.
d) All common stock, regardless of class, must have the same dividend privileges.
e) None of the above statements is necessarily true.
Question 5 1 / 1 point
Of the following provisions that might be found in a bond indenture, which would tend to reduce the coupon interest rate on the bond in question?
Question options:
a) A subordination clause in a debenture.
b) A call provision.
c) A convertible feature.
d) Having relatively few restrictive covenants.
e) All of the above.
Question 6 1 / 1 point
What major factor(s) led to the U.S. economic woes which started in 2007?
Question options:
a) U.S. overseas military engagements.
b) A decline in real estate values which resulted in increased mortgage defaults and foreclosures and a decline in financial markets.
c) The European economic crisis.
d) Inflation and manufacturing outsourcing.
e) None of the above.
Question 7 1 / 1 point
An American Depository Receipt (ADR) represents
Question options:
a) Debt sold by a foreign borrower that is denominated in the currency of the country where it is sold.
b) Stock of foreign companies that is sold directly to investors in the United States.
c) Equity instruments of one country that are sold in another country.
d) The certificates that represent ownership in foreign companies that are sold in the United States.
e) Certificates representing ownership in stocks of foreign companies that are held in trust by a bank located in the country the stock is traded.
Question 8 1 / 1 point
A basic knowledge of finance will help you with your personal investments by helping you understand
Question options:
a) how to accurately predict changes in the short term interest rates.
b) how to determine the optimal dividend policy for each firm.
c) how to determine which technology is most likely to be accepted by consumers.
d) how to review companies and industries to determine their prospects for future growth and the risk inherent in those companies and industries.
e) how to predict the growth in sales for the firm.
Question 9 1 / 1 point
Assume the securities are all issued by the same firm. From the investor's standpoint, rank the following securities in order of increasing risk (the number of the least risky security is placed first, or to the left, in the answer set).
(1) Preferred stock.
(2) Income bonds.
(3) Convertible preferred stock.
(4) Mortgage bonds.
Question options:
a) 1, 2, 3, 4
b) 4, 1, 2, 3
c) 4, 1, 3, 2
d) 4, 2, 1, 3
e) 4, 2, 3, 1
Question 10 1 / 1 point
The average American is knowledgeable about personal finance and tends to manage their retirement needs and debt levels responsibly.
Question options:
True
False
Question 11 1 / 1 point
In general, the role of the financial manager is to plan for the acquisition and use of funds in order to maximize the value of the firm.
Question options:
True
False
Question 12 1 / 1 point
Which of the following are NOT factors that have made the trend toward globalization mandatory for many businesses?
Question options:
a) Lower trade barriers
b) Demand for high-quality, low-cost products
c) Increased volatility of exchange rates for foreign currency
d) Increased development costs
e) Improvements in transportation and communications.
Question 13 1 / 1 point
In the early 1900s the emphasis of managerial finance was on the legal aspects of mergers, the formation of new firms, and the various types of securities firms could issue to raise funds.
Question options:
True
False
Question 14 1 / 1 point
Why is it important for persons in marketing, accounting, production, and other areas in the firm to understand finance?
Question options:
a) Funds availability affects the firm's ability to increase inventory, change plant capacity, and so forth.
b) Financial decisions are based on data provided by other functional areas of the firm; thus, it is in the best interests of such areas to provide the most optimistic information possible so that their projects seem most favorable.
c) There is a good chance persons in marketing, accounting, production, and other areas will have to work in the finance area someday if they want to move up the corporate ladder.
d) Payments of salaries and other expenses always pass through the finance area of the firm.
e) All of the above are correct answers.
Question 15 1 / 1 point
At the beginning of the twentieth century, for the most part, the only investments available to individual investors were corporate stocks and bonds; but, today, there are a significantly greater number of investment choices because investors' demands have changed.
Question options:
True
False
Question 16 1 / 1 point
The study of finance consists of three areas⎯financial markets, investments, and managerial finance⎯that are basically independent of each other, because you can be an expert in one area without having knowledge of the other two.
Question options:
True
False
Question 17 1 / 1 point
An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a(n)
Question options:
a) Call option.
b) Put option.
c) Out-of-the-money option.
d) Naked option.
e) Covered option.
Question 18 1 / 1 point
During the 1930s, investment experts suggested that stock value should be determined by computing the present value of the future cash flows associated with the stock.
Question options:
True
False
Question 19 1 / 1 point
Which of the following events would make it more likely that a company would choose to call its outstanding callable bonds?
Question options:
a) reduction in market interest rates.
b) The company's bonds are downgraded.
c) An increase in the call premium.
d) Answers a and b are both correct.
Question 20 1 / 1 point
The history of banking in the United States is one of continuous regulation to ensure the safety of our banking institution. For this reason, little deregulation has taken place.
Question options:
True
False
