BUSI 1301 FINAL EXAM UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Commercial paper, which is sometimes issued for as little
as two days, can be issued for up to 270 days.
Answer:
True
Question:
2. Term loans issued by commercial banks are popularly
used by financial institutions and large corporations
because they typically carry lower interest rates than
commercial paper.
Answer:
False
Question:
3. A factor is a restriction lenders impose on borrowers as a
condition of providing long-term debt financing.
Answer:
False
Question:
4. A commitment to meeting social responsibilities can
contribute to a more profitable company and an increase
in shareholder value
Answer:
true
Question:
5. Cash budgets normally cover a one-year period and
show projected cash inflows and outflows for each
month.
Answer:
True
,Question:
6. Leverage ratios measure the extent to which a firm uses
_______
Answer:
financial leverage
Question:
7. David needs to acquire financial capital to purchase a
printing press for his business. David can either acquire
the financial capital for the press by borrowing money
from a bank or by purchasing the press on credit from his
supplier.
Answer:
True
Question:
8. A budgeted income statement is a projected financial
statement that forecasts the types and amounts of assets
a firm will need to implement its future plans and how the
firm will finance those assets
Answer:
false
Question:
9. Certificate of deposit is an interest-earning deposit that
requires the funds to remain deposited for a fixed term.
Answer:
True
Question:
10. When conflicts arise between the long-term interests of
owners and those of other stakeholders, the fiduciary
duty required of financial managers generally leads them
to make decisions that are most consistent with the
interests of ownership.
Answer:
True
Question:
11. Projects with potential for high returns generally have a
low degree of uncertainty and risk.
Answer:
false
, Question:
12. Because it is normally unsecured, commercial paper is
only offered by firms with no credit ratings
Answer:
False
Question:
13. The extent to which retained earnings are used as a
source of long-term capital for a firm, depends on the
state of the economy.
Answer:
True
Question:
14. Which of the following statements is true of commercial
paper?
Answer:
It is not backed by a pledge of collateral
Question:
15. __________ are safe and highly liquid assets that many firms
list with their cash holdings on their balance sheet.
Answer:
Cash equivalents
Question:
16. Duk Yu, a beverage company, buys its raw materials from
Nessange, a fruits and vegetables exporting company,
without making any payment at the time of purchase.
Instead, Nessange allows Duk Yu to pay the total
purchase amount within a period of six months. Which of
the following short-term financing options is being used
by Duk Yu in the given scenario?
Answer:
Trade credit
Question:
17. In the context of accounting for the time value of money,
discount rate remains constant in a specified number of
time periods
Answer:
false
QUESTIONS AND CORRECT ANSWERS
Question:
1. Commercial paper, which is sometimes issued for as little
as two days, can be issued for up to 270 days.
Answer:
True
Question:
2. Term loans issued by commercial banks are popularly
used by financial institutions and large corporations
because they typically carry lower interest rates than
commercial paper.
Answer:
False
Question:
3. A factor is a restriction lenders impose on borrowers as a
condition of providing long-term debt financing.
Answer:
False
Question:
4. A commitment to meeting social responsibilities can
contribute to a more profitable company and an increase
in shareholder value
Answer:
true
Question:
5. Cash budgets normally cover a one-year period and
show projected cash inflows and outflows for each
month.
Answer:
True
,Question:
6. Leverage ratios measure the extent to which a firm uses
_______
Answer:
financial leverage
Question:
7. David needs to acquire financial capital to purchase a
printing press for his business. David can either acquire
the financial capital for the press by borrowing money
from a bank or by purchasing the press on credit from his
supplier.
Answer:
True
Question:
8. A budgeted income statement is a projected financial
statement that forecasts the types and amounts of assets
a firm will need to implement its future plans and how the
firm will finance those assets
Answer:
false
Question:
9. Certificate of deposit is an interest-earning deposit that
requires the funds to remain deposited for a fixed term.
Answer:
True
Question:
10. When conflicts arise between the long-term interests of
owners and those of other stakeholders, the fiduciary
duty required of financial managers generally leads them
to make decisions that are most consistent with the
interests of ownership.
Answer:
True
Question:
11. Projects with potential for high returns generally have a
low degree of uncertainty and risk.
Answer:
false
, Question:
12. Because it is normally unsecured, commercial paper is
only offered by firms with no credit ratings
Answer:
False
Question:
13. The extent to which retained earnings are used as a
source of long-term capital for a firm, depends on the
state of the economy.
Answer:
True
Question:
14. Which of the following statements is true of commercial
paper?
Answer:
It is not backed by a pledge of collateral
Question:
15. __________ are safe and highly liquid assets that many firms
list with their cash holdings on their balance sheet.
Answer:
Cash equivalents
Question:
16. Duk Yu, a beverage company, buys its raw materials from
Nessange, a fruits and vegetables exporting company,
without making any payment at the time of purchase.
Instead, Nessange allows Duk Yu to pay the total
purchase amount within a period of six months. Which of
the following short-term financing options is being used
by Duk Yu in the given scenario?
Answer:
Trade credit
Question:
17. In the context of accounting for the time value of money,
discount rate remains constant in a specified number of
time periods
Answer:
false
