Question 1 of 25<\/p>\n
4.0 Points<\/p>\n
As a general rule, it is desirable to finance the permanent assets, including “permanent current assets”, with long-term debt and equity.<\/p>\n
True<\/p>\n
False<\/p>\n
Question 2 of 25<\/p>\n
Short-term interest rates are generally lower than long-term interest rates.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 3 of 25<\/p>\n
4.0 Points<\/p>\n
Commercial bank term loans<\/p>\n
A.usually carry fixed interest rates.<\/p>\n
B.are very short-term in nature.<\/p>\n
C.are offered to superior credit applicants.<\/p>\n
D.both b and c.<\/p>\n
Question 4 of 25<\/p>\n
4.0 Points<\/p>\n
Dun & Bradstreet is known for providing<\/p>\n
A.interest rate information to cash managers.<\/p>\n
B.credit scoring reports that rank a company’s payment habits relative to its peer group.<\/p>\n
C.cash management systems to corporate treasurers.<\/p>\n
D.consumer credit reports to credit card companies<\/p>\n
Question 5 of 25<\/p>\n
4.0 Points<\/p>\n
Small companies finance a relatively greater proportion of their assets through trade credit than do larger concerns.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 6 of 25<\/p>\n
4.0 Points<\/p>\n
A financial executive devotes the most time to<\/p>\n
A.Long-range planning.<\/p>\n
B.Capital budgeting.<\/p>\n
C.Short-term financing.<\/p>\n
D.Working capital management.<\/p>\n
Question 7 of 25<\/p>\n
4.0 Points<\/p>\n
Short-term financing is risky because of the possibility of rising short-term rates and the inability of always being able to refund short-term debt.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 8 of 25<\/p>\n
4.0 Points<\/p>\n
From the banker’s point of view, short-term bank credit is an excellent way of financing<\/p>\n
A.fixed assets.<\/p>\n
B.permanent working capital needs.<\/p>\n
C.repayment of long-term debt.<\/p>\n
D.seasonal bulges in inventory and receivables.<\/p>\n
Question 9 of 25<\/p>\n
4.0 Points<\/p>\n
One of the first considerations in cash management is<\/p>\n
A.to have as much cash as possible on hand.<\/p>\n
B.synchronization of cash inflows and cash outflows.<\/p>\n
C.profitability.<\/p>\n
D.to put any excess cash into accounts receivable.<\/p>\n
Question 10 of 25<\/p>\n
4.0 Points<\/p>\n
Cash balances are usually determined by the amount of cash flowing through the firm on a yearly basis.<\/p>\n
True<\/p>\n
False<\/p>\n
Question 11 of 25<\/p>\n
4.0 Points<\/p>\n
Seasonal production allows for maximum efficiency in machinery and manpower use.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 12 of 25<\/p>\n
4.0 Points<\/p>\n
Even during slack loan periods, banks will never loan out money at an interest rate lower than the prime rate because the prime rate is their best rate.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 13 of 25<\/p>\n
4.0 Points<\/p>\n
The use of cash budgeting procedures<\/p>\n
A.helps the firm plan its current asset levels for a given production plan.<\/p>\n
B.makes managing inventory easier under seasonal production.<\/p>\n
C. illustrates fluctuating levels of current assets for a given production plan.<\/p>\n
D. all of these are correct.<\/p>\n
Question 14 of 25<\/p>\n
4.0 Points<\/p>\n
Permanent current assets are not similar to fixed assets because they are fully liquidated within the year.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 15 of 25 4.0 Points<\/p>\n
Modos Company has deposited $3,500 in checks received from customers. It has written $1,400 in checks to its suppliers. The initial bank and book balance was $600. If $1,600 of its customer s checks have cleared but only $600 of its own, calculate its float.<\/p>\n
A.$1,200<\/p>\n
B.$1,100<\/p>\n
C.$300<\/p>\n
D.$700<\/p>\n
Bank balance = $600 + $1.600 – $600 = $1,600<\/p>\n
Book balance = $600 + $3,500 – $1,400 = $2,700<\/p>\n
Float = $1,100<\/p>\n
Question 16 of 25<\/p>\n
4.0 Points<\/p>\n
A Just-In-Time (JIT) inventory management program has all but which of the following requirements?<\/p>\n
A.quality production<\/p>\n
B.large safety stocks<\/p>\n
C.close ties between suppliers, manufacturers, and customers<\/p>\n
D.minimizing inventory levels<\/p>\n
Question 17 of 25<\/p>\n
4.0 Points<\/p>\n
Because of changing economic conditions, it is difficult for companies such as Dun & Bradstreet to devise models predicting payment problems and probability of bankruptcy 12 months in the future.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 18 of 25<\/p>\n
4.0 Points<\/p>\n
A trade discount is a percentage reduction from the invoice price given for purchasing certain minimum quantities.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n
Question 19 of 25<\/p>\n
4.0 Points<\/p>\n
The Truth in Lending law is designed to protect<\/p>\n
A.corporate borrowers.<\/p>\n
B.banks.<\/p>\n
C. consumers.<\/p>\n
D.investors in municipal bonds.<\/p>\n
Question 20 of 25<\/p>\n
4.0 Points<\/p>\n
A “normal” term structure of interest rates would depict<\/p>\n
A.short-term rates higher than long-term rates.<\/p>\n
B.long-term rates higher than short-term rates.<\/p>\n
C.no general relationship between short- and long-term rates.<\/p>\n
D.Intermediate rates (1-5 years) lower than both short-term and long-term rates.<\/p>\n
Question 21 of 25<\/p>\n
4.0 Points<\/p>\n
Bank loans to business firms<\/p>\n
A.are usually short-term in nature.<\/p>\n
B.are preferred by the banker to be self-liquidating.<\/p>\n
C.may require compensating balances.<\/p>\n
D.all of these.<\/p>\n
Question 22 of 25<\/p>\n
4.0 Points<\/p>\n
Normally, permanent current assets should be financed by<\/p>\n
A.long-term funds.<\/p>\n
B.short-term funds.<\/p>\n
C.borrowed funds.<\/p>\n
D.internally generated funds.<\/p>\n
Question 23 of 25<\/p>\n
4.0 Points<\/p>\n
Which of the following is not a valid quantitative measure for accounts receivable collection policies?<\/p>\n
A.average collection period<\/p>\n
B.aging of accounts receivables<\/p>\n
C.ratio of debt to equity<\/p>\n
D.ratio of bad debts to credit sales<\/p>\n
Question 24 of 25<\/p>\n
4.0 Points<\/p>\n
Working capital management is relatively unimportant for the small business.<\/p>\n
True<\/p>\n
False<\/p>\n
Question 25 of 25<\/p>\n
4.0 Points<\/p>\n
For most firms, the primary motive for holding cash is the transaction motive.<\/p>\n
A. True<\/p>\n
B. False<\/p>\n","protected":false},"excerpt":{"rendered":"
Question 1 of 25 4.0 Points As a general rule, it is desirable to finance the permanent assets, including “permanent current assets”, with long-term debt and equity. True False Question 2 of 25 Short-term interest rates are generally lower than Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-118477","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/118477","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=118477"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/118477\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=118477"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=118477"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=118477"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}