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FOUNDATIONS OF BUSINESS FINANCE (PEREGRINE) EXAM
AND PRACTICE EXAM NEWEST ACTUAL EXAM COMPLETE 160
QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+||JUST OUT!!!
Short-term debt - ANSWER-Debt with a maturity of 1 year or
less
Treasury bills (T-bills) - ANSWER-Discounted securities issued by
the U.S. government to finance operations
Repurchase agreement (repo) - ANSWER-An arrangement in
which one firm sells some of its financial assets to another firm
with a promise to repurchase the securities at a higher price at
a later date
Commercial paper - ANSWER-A type of promissory note, or
legal IOU, issued by large, financially sound firms
Eurodollar deposit - ANSWER-A deposit in a bank outside the
United States that is not converted into the currency of the
foreign country; instead, it is denominated in U.S. dollars
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Long-term debt - ANSWER-Debt instruments with maturities
greater than 1 year
Term loan - ANSWER-A contract under which a borrower agrees
to make a series of interest and principal payments on specific
dates to the lender
Term loans have three major advantages over public debt
offerings, such as corporate bonds: __________, __________,
and __________ __________ __________. - ANSWER-speed,
flexibility, low issuance costs
Bond - ANSWER-A long-term contract under which a borrower
agrees to make payments of interest and principal on specific
dates to the bondholder
The periodic interest payments on bonds are determined by the
__________ __________ and the __________, or __________
__________ of the bond. - ANSWER-coupon rate, principal, face
value
Indenture - ANSWER-A legal document that spells out any legal
restrictions associated with a bond as well as the rights of
bondholders (lenders) and the corporation (bond issuer)
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Most corporate bonds contain a __________ __________,
which gives the issuing corporation the right to call the bonds
for redemption prior to maturity. - ANSWER-call provision
Sinking fund - ANSWER-A provision that facilitates the orderly
retirement of a bond issue
Derivatives - ANSWER-Financial assets that have values based
on, or derived from, the values of other assets, such as stocks or
bonds
Option - ANSWER-A contract that gives its holder the right to
buy (sell) an asset at some predetermined price within a
specified period of time
A __________ option gives the holder the right to purchase, or
call in, shares of a stock for purchase at a predetermined price
at any time during the option period. - ANSWER-call
A __________ option gives the holder the right to sell, or put
out, shares of a stock at a specified price during the option
period. - ANSWER-put
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__________ __________ are bonds or preferred stocks that can
be exchanged for, or converted into, common stock at the
option of the holder. - ANSWER-Convertible securities
One of the most important provisions of a convertible security
is the __________ __________, which is defined as the number
of shares of stock that the convertible holder receives upon
conversion. - ANSWER-conversion ratio
Conversion price - ANSWER-The effective price paid for the
common stock obtained by converting a convertible security
True or false: The one fixed asset that is not depreciated is land
because it seldom declines in value. - ANSWER-True
__________ liabilities are those due within one year. - ANSWER-
Current
__________-__________ __________ liabilities are due after
more than a year, and may include bonds, mortgages, and long-
term loans. - ANSWER-Long-term debt
FOUNDATIONS OF BUSINESS FINANCE (PEREGRINE) EXAM
AND PRACTICE EXAM NEWEST ACTUAL EXAM COMPLETE 160
QUESTIONS AND CORRECT DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A+||JUST OUT!!!
Short-term debt - ANSWER-Debt with a maturity of 1 year or
less
Treasury bills (T-bills) - ANSWER-Discounted securities issued by
the U.S. government to finance operations
Repurchase agreement (repo) - ANSWER-An arrangement in
which one firm sells some of its financial assets to another firm
with a promise to repurchase the securities at a higher price at
a later date
Commercial paper - ANSWER-A type of promissory note, or
legal IOU, issued by large, financially sound firms
Eurodollar deposit - ANSWER-A deposit in a bank outside the
United States that is not converted into the currency of the
foreign country; instead, it is denominated in U.S. dollars
,2|Page
Long-term debt - ANSWER-Debt instruments with maturities
greater than 1 year
Term loan - ANSWER-A contract under which a borrower agrees
to make a series of interest and principal payments on specific
dates to the lender
Term loans have three major advantages over public debt
offerings, such as corporate bonds: __________, __________,
and __________ __________ __________. - ANSWER-speed,
flexibility, low issuance costs
Bond - ANSWER-A long-term contract under which a borrower
agrees to make payments of interest and principal on specific
dates to the bondholder
The periodic interest payments on bonds are determined by the
__________ __________ and the __________, or __________
__________ of the bond. - ANSWER-coupon rate, principal, face
value
Indenture - ANSWER-A legal document that spells out any legal
restrictions associated with a bond as well as the rights of
bondholders (lenders) and the corporation (bond issuer)
,3|Page
Most corporate bonds contain a __________ __________,
which gives the issuing corporation the right to call the bonds
for redemption prior to maturity. - ANSWER-call provision
Sinking fund - ANSWER-A provision that facilitates the orderly
retirement of a bond issue
Derivatives - ANSWER-Financial assets that have values based
on, or derived from, the values of other assets, such as stocks or
bonds
Option - ANSWER-A contract that gives its holder the right to
buy (sell) an asset at some predetermined price within a
specified period of time
A __________ option gives the holder the right to purchase, or
call in, shares of a stock for purchase at a predetermined price
at any time during the option period. - ANSWER-call
A __________ option gives the holder the right to sell, or put
out, shares of a stock at a specified price during the option
period. - ANSWER-put
, 4|Page
__________ __________ are bonds or preferred stocks that can
be exchanged for, or converted into, common stock at the
option of the holder. - ANSWER-Convertible securities
One of the most important provisions of a convertible security
is the __________ __________, which is defined as the number
of shares of stock that the convertible holder receives upon
conversion. - ANSWER-conversion ratio
Conversion price - ANSWER-The effective price paid for the
common stock obtained by converting a convertible security
True or false: The one fixed asset that is not depreciated is land
because it seldom declines in value. - ANSWER-True
__________ liabilities are those due within one year. - ANSWER-
Current
__________-__________ __________ liabilities are due after
more than a year, and may include bonds, mortgages, and long-
term loans. - ANSWER-Long-term debt
