BFIN 300 STUDY TEST QUESTIONS
WITH ALL CORRECT ANSWERS
What kind of expense is depreciation? - Answer-non-cash expense
T or F depreciation needs to be added back into cash coverage ratio - Answer-True
What does the receivables turnover ratio measure? - Answer-How much sales covers
accounts receivable
proxy ballot - Answer-a ballot cast on behalf of shareholder on certain corporate matters
prefered stock - Answer-less risky, first to get money back, but dont get a vote
What are 2 ways a company can issue new securities? - Answer-1.Private placement 2.
investment banking
example of secondary market - Answer-New York Stock Exchange
stock split - Answer-an increase in the number of outstanding shares of a company's
stock
derivative stock - Answer-vale of stock predicted on another security
Gross Domestic Product (GDP) - Answer-estimates the difference between actual and
potential GTP (usually for a crisis)
financial security - Answer-a contract between the provider of funds and the user of
funds
What is a security to an investor? - Answer-stream of expected future cash flow
equity investors - Answer-shareholders of the company
debt investors - Answer-owners of the firm
What is the most common face value? - Answer-Par value
, fixed coupon bond - Answer-the most common type of bond, it pays a fixed interest rate
and has a known maturity
zero coupon bond - Answer-a bond that makes no coupon payments and thus is initially
priced at a deep discount. Payment is fixed
Variable Rate Bonds - Answer-Long term debt securities with a coupon rate that is
periodically adjusted.
income bonds - Answer-Bonds that pay no interest unless the issuing company is
profitable.
convertable bonds - Answer-bonds that can be exchanged for share of stock in the
company, this is at the option of the investor
callable bonds - Answer-bonds that the issuing company can redeem (buy back) at a
predetermined price.
primary market - Answer-a market in which new issues of securities are offered to the
public
T or F equity holder has residual value of the company - Answer-True
what does the investment bank advise on? - Answer-Terms, Price, Timing ,Selling
who is the middleman between the buyer and seller - Answer-Broker "agent"
money market - Answer-market in which money is lent for periods of less than a year
insider trading laws - Answer-Laws that prohibit insiders who have access to certain
information that is not available to the general investment public
what are investors required rate of return determined by? - Answer-Opportunity cost
cost of capital - Answer-the rate of return a company
Bonds Yeild to Maturity - Answer-bonds required rate of return
How does corporate cause capital? - Answer-issue stocks/bonds
T or F Loan can turn into a security - Answer-True because it's a contract
When investment rate goes up then bond value goes... - Answer-DOWN
bond indenture - Answer-a legal contract between corp and whoever lending them $
WITH ALL CORRECT ANSWERS
What kind of expense is depreciation? - Answer-non-cash expense
T or F depreciation needs to be added back into cash coverage ratio - Answer-True
What does the receivables turnover ratio measure? - Answer-How much sales covers
accounts receivable
proxy ballot - Answer-a ballot cast on behalf of shareholder on certain corporate matters
prefered stock - Answer-less risky, first to get money back, but dont get a vote
What are 2 ways a company can issue new securities? - Answer-1.Private placement 2.
investment banking
example of secondary market - Answer-New York Stock Exchange
stock split - Answer-an increase in the number of outstanding shares of a company's
stock
derivative stock - Answer-vale of stock predicted on another security
Gross Domestic Product (GDP) - Answer-estimates the difference between actual and
potential GTP (usually for a crisis)
financial security - Answer-a contract between the provider of funds and the user of
funds
What is a security to an investor? - Answer-stream of expected future cash flow
equity investors - Answer-shareholders of the company
debt investors - Answer-owners of the firm
What is the most common face value? - Answer-Par value
, fixed coupon bond - Answer-the most common type of bond, it pays a fixed interest rate
and has a known maturity
zero coupon bond - Answer-a bond that makes no coupon payments and thus is initially
priced at a deep discount. Payment is fixed
Variable Rate Bonds - Answer-Long term debt securities with a coupon rate that is
periodically adjusted.
income bonds - Answer-Bonds that pay no interest unless the issuing company is
profitable.
convertable bonds - Answer-bonds that can be exchanged for share of stock in the
company, this is at the option of the investor
callable bonds - Answer-bonds that the issuing company can redeem (buy back) at a
predetermined price.
primary market - Answer-a market in which new issues of securities are offered to the
public
T or F equity holder has residual value of the company - Answer-True
what does the investment bank advise on? - Answer-Terms, Price, Timing ,Selling
who is the middleman between the buyer and seller - Answer-Broker "agent"
money market - Answer-market in which money is lent for periods of less than a year
insider trading laws - Answer-Laws that prohibit insiders who have access to certain
information that is not available to the general investment public
what are investors required rate of return determined by? - Answer-Opportunity cost
cost of capital - Answer-the rate of return a company
Bonds Yeild to Maturity - Answer-bonds required rate of return
How does corporate cause capital? - Answer-issue stocks/bonds
T or F Loan can turn into a security - Answer-True because it's a contract
When investment rate goes up then bond value goes... - Answer-DOWN
bond indenture - Answer-a legal contract between corp and whoever lending them $
