C201 BUSINESS ACUMEN QUESTIONS & ANSWERS
Ch.17
In performing their jobs, most finance professionals seek to balance:
risk and reward.
taxes and revenues.
profits and loss.
investment and capital. - Answers -risk and reward.
Ch.17
_____ involves planning, obtaining, and managing a company's funds in order to
accomplish its objectives as efficiently and effectively as possible.
Accounting
Auditing
Finance
Leverage - Answers -Finance
Ch.17
The process of maximizing the wealth of a company's shareholders by striking the
optimal balance between risk and return is called _____.
Risk-return buyout
Risk-return forecasting
Risk-return trade-off
Risk-return restructuring - Answers -Risk-return trade-off
Ch.17
A(n) _____, which is short-term in nature, can also be called an operating plan.
financial plan
budget
asset intensity
stock offering - Answers -financial plan
Ch.17
All of the following are short-term assets EXCEPT:
inventory.
cash.
accounts receivable.
equipment. - Answers -equipment.
,Ch.17
Most companies invest excess cash in marketable securities.
True
False - Answers -True
Ch.17
The key to managing leverage is to ensure a company's interest payments remain
larger its earnings.
True
False - Answers -False
Ch.17
Borrowing cash allows a company to leverage, _____ the rate of return on funds
invested.
increasing
decreasing
divesting
stabilizing - Answers -increasing
Ch.17
For which of the following types of short-term loans do banks guarantee that the funds
will be available when needed?
Trade credit
Revolving credit agreements
Line of credits
Commercial paper - Answers -Revolving credit agreements
Ch.17
There are two types of short-term bank loans: line of credit and _____ agreements.
certificates of deposit
deposit turnovers
revolving credit
commercial paper - Answers -revolving credit
Ch.17
A sovereign wealth fund is:
a private investment company open only to qualified, major investors.
a source of long-term capital raised from wealthy individuals and institutional investors.
,a form of investment bank that operates internationally.
a form of private equity owned by governments. - Answers -a form of private equity
owned by governments.
Ch.17
Unlike venture capital funds, private equity funds will invest even in mature companies.
True
False - Answers -True
Ch.17
In a transaction in which two or more companies combine into one company, the seller
is often referred to as the _____.
shareholder
conglomerate
target
merger - Answers -target
Ch.17
Financial managers:
are concerned with acquiring funds but not the use of funds.
work independently of the strategic plan to maximize shareholder value.
present financial data that is timely, accurate, and relevant.
develop a financial plan and determine the most appropriate sources and uses of funds.
- Answers -develop a financial plan and determine the most appropriate sources and
uses of funds.
Ch.17
In a large corporation, which executive reports directly to the chief executive officer and
is largely responsible for setting financial policy?
The chief financial officer
The treasurer
The chief operating officer
The controller - Answers -The chief financial officer
Ch.3
Macroeconomics is the study of small economic units such as households and
individual businesses.
, True
False - Answers -False
Ch.3
Which of the following is true of supply and demand curves?
When the demand curve is parallel to the supply curve, an equilibrium price is achieved.
A supply curve shows buyers' willingness to buy, whereas a demand curve shows
producers' willingness to sell.
A supply curve slopes downward, whereas a demand curve slopes upward.
Movement along the supply curve is the opposite of movement along the demand
curve. - Answers -Movement along the supply curve is the opposite of movement
along the demand curve.
Ch.3
In which of the following market structures are there a large numbers of buyers and
sellers, each of whom has some significant control over price?
Oligopoly
Monopoly
Monopolistic competition
Pure competition - Answers -Monopolistic competition
Ch.3
A few industries in the United States, like transportation, energy, and communications,
were deregulated in the 1980s and 1990s to:
reduce aggressive competition.
counteract outsourcing.
balance the forces of demand and supply.
improve customer service and reduce prices. - Answers -improve customer service
and reduce prices.
Ch.3
If labor hours increase, the amount of natural resources used remains the same, and
output remains constant, productivity is said to have:
first decreased and then increased.
increased.
decreased.
Ch.17
In performing their jobs, most finance professionals seek to balance:
risk and reward.
taxes and revenues.
profits and loss.
investment and capital. - Answers -risk and reward.
Ch.17
_____ involves planning, obtaining, and managing a company's funds in order to
accomplish its objectives as efficiently and effectively as possible.
Accounting
Auditing
Finance
Leverage - Answers -Finance
Ch.17
The process of maximizing the wealth of a company's shareholders by striking the
optimal balance between risk and return is called _____.
Risk-return buyout
Risk-return forecasting
Risk-return trade-off
Risk-return restructuring - Answers -Risk-return trade-off
Ch.17
A(n) _____, which is short-term in nature, can also be called an operating plan.
financial plan
budget
asset intensity
stock offering - Answers -financial plan
Ch.17
All of the following are short-term assets EXCEPT:
inventory.
cash.
accounts receivable.
equipment. - Answers -equipment.
,Ch.17
Most companies invest excess cash in marketable securities.
True
False - Answers -True
Ch.17
The key to managing leverage is to ensure a company's interest payments remain
larger its earnings.
True
False - Answers -False
Ch.17
Borrowing cash allows a company to leverage, _____ the rate of return on funds
invested.
increasing
decreasing
divesting
stabilizing - Answers -increasing
Ch.17
For which of the following types of short-term loans do banks guarantee that the funds
will be available when needed?
Trade credit
Revolving credit agreements
Line of credits
Commercial paper - Answers -Revolving credit agreements
Ch.17
There are two types of short-term bank loans: line of credit and _____ agreements.
certificates of deposit
deposit turnovers
revolving credit
commercial paper - Answers -revolving credit
Ch.17
A sovereign wealth fund is:
a private investment company open only to qualified, major investors.
a source of long-term capital raised from wealthy individuals and institutional investors.
,a form of investment bank that operates internationally.
a form of private equity owned by governments. - Answers -a form of private equity
owned by governments.
Ch.17
Unlike venture capital funds, private equity funds will invest even in mature companies.
True
False - Answers -True
Ch.17
In a transaction in which two or more companies combine into one company, the seller
is often referred to as the _____.
shareholder
conglomerate
target
merger - Answers -target
Ch.17
Financial managers:
are concerned with acquiring funds but not the use of funds.
work independently of the strategic plan to maximize shareholder value.
present financial data that is timely, accurate, and relevant.
develop a financial plan and determine the most appropriate sources and uses of funds.
- Answers -develop a financial plan and determine the most appropriate sources and
uses of funds.
Ch.17
In a large corporation, which executive reports directly to the chief executive officer and
is largely responsible for setting financial policy?
The chief financial officer
The treasurer
The chief operating officer
The controller - Answers -The chief financial officer
Ch.3
Macroeconomics is the study of small economic units such as households and
individual businesses.
, True
False - Answers -False
Ch.3
Which of the following is true of supply and demand curves?
When the demand curve is parallel to the supply curve, an equilibrium price is achieved.
A supply curve shows buyers' willingness to buy, whereas a demand curve shows
producers' willingness to sell.
A supply curve slopes downward, whereas a demand curve slopes upward.
Movement along the supply curve is the opposite of movement along the demand
curve. - Answers -Movement along the supply curve is the opposite of movement
along the demand curve.
Ch.3
In which of the following market structures are there a large numbers of buyers and
sellers, each of whom has some significant control over price?
Oligopoly
Monopoly
Monopolistic competition
Pure competition - Answers -Monopolistic competition
Ch.3
A few industries in the United States, like transportation, energy, and communications,
were deregulated in the 1980s and 1990s to:
reduce aggressive competition.
counteract outsourcing.
balance the forces of demand and supply.
improve customer service and reduce prices. - Answers -improve customer service
and reduce prices.
Ch.3
If labor hours increase, the amount of natural resources used remains the same, and
output remains constant, productivity is said to have:
first decreased and then increased.
increased.
decreased.
