Business Quiz: Mastering Financial Management

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1. An initial public offering (IPO) occurs when a corporation sells common stock to the general public for the first time.

True

False

See page 563 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See page 563 in Business (Pride, Hughes, & Kapoor, 2014).

About This Quiz

Business Quiz: Mastering Financial Management - Quiz

Book reference for the quiz: Business (Pride, Hughes, & Kapoor, 2014)

2. Unsecured financing is financing that is not backed by collateral.

True

False

See page 559 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See page 559 in Business (Pride, Hughes, & Kapoor, 2014).

3. One of the most important priorities for someone interested in a finance career is (select the best answer):

Making money

Dressing well

Having a nice car

Honesty

See page 554 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See page 554 in Business (Pride, Hughes, & Kapoor, 2014).

4. Short-term financing is money that will be used for five years or less.

True

False

Short-term financing is money that will be used for one year or less. See page 554 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

Short-term financing is money that will be used for one year or less. See page 554 in Business (Pride, Hughes, & Kapoor, 2014).

5. Short-term debt financing is usually easier to obtain than long-term debt financing because (select the best answer):

For the lender, the shorter repayment period means less risk of non-payment.

The dollar amounts of short-term loans are usually smaller than those of long-term loans.

A close working relationship normally exists between the short-term borrower and the lender.

All of the above

See page 559 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See page 559 in Business (Pride, Hughes, & Kapoor, 2014).

6. A factor is a firm that specializes in buying other firms' (select the best answer):

Trade credit

Promissory notes

Inventory

Accounts receivable

See page 562 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See page 562 in Business (Pride, Hughes, & Kapoor, 2014).

7. The steps in financial planning include (check all that apply):

Establishing organizational goals and objectives

Setting up a slush fund

Budgeting for financial needs

Identifying sources of funds

See pages 557-559 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

See pages 557-559 in Business (Pride, Hughes, & Kapoor, 2014).

Submit

8. Sources of unsecured short-term financing include (check all that apply):

Trade credit

Promissory notes issued to suppliers

Unsecured bank loans

Commercial paper

Inventory

Accounts receivable

All of the above

Inventory and accounts receivable are sources of secured short-term financing. See pages 559-561 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

Inventory and accounts receivable are sources of secured short-term financing. See pages 559-561 in Business (Pride, Hughes, & Kapoor, 2014).

Submit

9. The secondary market is a market for existing financial securities that are traded between investors, and includes (check all that apply):

Initial public offerings

Primary markets and investment banking firms

Securities exchanges

The over-the-counter (OTC) market

All of the above

Initial public offerings and sale of stock by investment banking firms are part of the primary market. See pages 563-565 in Business (Pride, Hughes, & Kapoor, 2014).

Explanation

Initial public offerings and sale of stock by investment banking firms are part of the primary market. See pages 563-565 in Business (Pride, Hughes, & Kapoor, 2014).

Submit

10. Match the following long-term debt financing terms with their definitions.

Financial leverage

Term-loan agreement

Corporate bond

Maturity date

Trustee