BSNS114 Theory Exam with
Questions and 100% Correct Answers
spending $1 billion to upgrade operating processor - Answer what is an
investment decision for Microsoft
investment, financing - Answer to start and continue running a business, companies
need assets to create economic value for the business. The process in deciding which
assets to buy is usually termed the ___________ decision. The decision about how to
raise the money is usually termed the ____________ decision
should we stock up wit inventory before the sales season. Should we modify the firms
credit collection policy with its customers? - Answer what is considered a working
capital management decision for a financial manager
shareholders will only lose what they invest in the business. shareholders can sell their
ownership of shares in the stock market - Answer Michael Hill owns jewellery stores in
New Zealand, Australia, and US. it is publicly listed on the New Zealand stock exchange.
It is a separate legal entity and shareholders in this business do not have personal
liability for the firms debts. Which of the following are correct features of this form of
business.
helping corporate companies buy real assets - Answer what is not a function of the
financial market
, corporation - Answer what form of business structure faces the greatest
agency problems
allow managers to be members of the 'compensation committee' that determines
the pay packages for those same managers - Answer Board of directors can take a
wide range of actions to reduce potential conflict of interests between shareholders
and managers in a corporation. what would not be useful for reducing these conflicts
a zero coupon bond - Answer a bond that makes NO coupon payments and is
initially priced at a deep discount is called
the realise a value loss if you sold the bond at the market price today - Answer you
own a bond that has a 7% coupon and matures in 12 years. you purchased this bond at
par value. if the prevailing market rate for this type and quality of bond is now 7.5%
then you would expect
indenture - Answer the written agreement that contains the specific details related to a
bond issue is called the bond
lower coupon rate and longer time to maturity - Answer bondholders are subject to
a different degree of interest rate risk because of bonds sensitivity to price changes
in market interest rate. this sensitivity directly depends on the time to maturity and
the coupon rate of a bond. which of the following characteristics of bonds are most
sensitive to interest rate changing?
preference shares do not have voting rights. common shares have the right to vote
for the appointment of board of directors.
dividend payment for shareholders of common shares are not set at a fixed rate and
can change as being determined by the board of directors.
Questions and 100% Correct Answers
spending $1 billion to upgrade operating processor - Answer what is an
investment decision for Microsoft
investment, financing - Answer to start and continue running a business, companies
need assets to create economic value for the business. The process in deciding which
assets to buy is usually termed the ___________ decision. The decision about how to
raise the money is usually termed the ____________ decision
should we stock up wit inventory before the sales season. Should we modify the firms
credit collection policy with its customers? - Answer what is considered a working
capital management decision for a financial manager
shareholders will only lose what they invest in the business. shareholders can sell their
ownership of shares in the stock market - Answer Michael Hill owns jewellery stores in
New Zealand, Australia, and US. it is publicly listed on the New Zealand stock exchange.
It is a separate legal entity and shareholders in this business do not have personal
liability for the firms debts. Which of the following are correct features of this form of
business.
helping corporate companies buy real assets - Answer what is not a function of the
financial market
, corporation - Answer what form of business structure faces the greatest
agency problems
allow managers to be members of the 'compensation committee' that determines
the pay packages for those same managers - Answer Board of directors can take a
wide range of actions to reduce potential conflict of interests between shareholders
and managers in a corporation. what would not be useful for reducing these conflicts
a zero coupon bond - Answer a bond that makes NO coupon payments and is
initially priced at a deep discount is called
the realise a value loss if you sold the bond at the market price today - Answer you
own a bond that has a 7% coupon and matures in 12 years. you purchased this bond at
par value. if the prevailing market rate for this type and quality of bond is now 7.5%
then you would expect
indenture - Answer the written agreement that contains the specific details related to a
bond issue is called the bond
lower coupon rate and longer time to maturity - Answer bondholders are subject to
a different degree of interest rate risk because of bonds sensitivity to price changes
in market interest rate. this sensitivity directly depends on the time to maturity and
the coupon rate of a bond. which of the following characteristics of bonds are most
sensitive to interest rate changing?
preference shares do not have voting rights. common shares have the right to vote
for the appointment of board of directors.
dividend payment for shareholders of common shares are not set at a fixed rate and
can change as being determined by the board of directors.
