Business 50 Multiple Choice Questions Assignment

| July 29, 2018

QuizNote: It is recommended that you save your response as you complete each question.Question 1 (2 points) Question 1 UnsavedThe traditional goal of financial management has been to maximize the value of the firm to itsowners.Question 1 options:TrueFalseSaveQuestion 2 (2 points) Question 2 UnsavedFinance is the area of business responsible for finding the best sources of funds to acquire forbusiness operations and then determining the best way to use those funds.Question 2 options:TrueFalseSaveQuestion 3 (2 points) Question 3 UnsavedSocial responsibility is NOT considered a long-term financial performance concern for financialmanagers.Question 3 options:TrueFalseSaveQuestion 4 (2 points) Question 4 UnsavedThomas is ready to launch his vending truck business, but is in need of start-up financing. Thebest funding source for Thomas’ business would be a bank or other established lenders.Question 4 options:TrueFalseSaveQuestion 5 (2 points) Question 5 UnsavedA corporation can raise additional equity financing by taking out a long-term loan from a bank.Question 5 options:TrueFalseSaveQuestion 6 (2 points) Question 6 UnsavedInterest payments on a firm’s debt are a tax-deductible expense.Question 6 options:TrueFalseSaveQuestion 7 (2 points) Question 7 UnsavedCEOs have been accused of many things, especially when the public perceives them as greedy.When it comes to blending shareholder value with social responsibility, it doesn’t have to be acase of oil and water, however. Which of the following scenarios best describes how the twoshould relate?Question 7 options:A chief executive is probably most effective when he is both rock star and quietly hardworkingbecause if he works hard, the publicity he generates will be a boon for the company.It’s simple: no matter how much a CEO earns or what his or her perks are, if the company isprofitable and generates sustainable growth, everybody wins as long as the enterprise is led ina socially responsible way.Case in point regarding how CEOs abuse their positions: they all fly in private jets. Plus, if theyare fired, they retain all their billions in stocks. So there’s a conflict of interest betweenmaximizing shareholder value and the CEO’s compensation when the CEO is also ashareholder.The best way to maximize shareholder value while being socially responsible is to allow thefederal government to legally cap CEO pay in publicly traded companies. They already do thisin some professional sports. Wall Street is overdue.SaveQuestion 8 (2 points) Question 8 UnsavedFinancial planning asks all of the following questions EXCEPT:Question 8 options:What specific assets must the firm obtain in order to achieve its goals?How much additional financing will the firm need to acquire assets?When will the firm need to acquire external financing?How does the firm determine its pricing strategy?SaveQuestion 9 (2 points) Question 9 UnsavedAdvantages of debt financing include all of the following EXCEPTQuestion 9 options:covenants that provide important benefits to the borrower are normally included in debtagreements.interest payments on debt are tax-deductible.the firm can acquire added funds without requiring current owners to contribute additional fundsof their own.using debt can increase the return on equity to owners during periods of strong earnings.SaveQuestion 10 (2 points) Question 10 Unsaved_____ is the use of debt in a firm’s capital structure.Question 10 options:Financial leverageLiquidity boostingDebt loadingDiscountingSaveQuestion 11 (2 points) Question 11 UnsavedFinancial capital is used to meet short- and long-term obligations.Question 11 options:TrueFalseSaveQuestion 12 (2 points) Question 12 UnsavedHistorically, the goal of financial management has been to achieve a dominant market share.Question 12 options:TrueFalseSaveQuestion 13 (2 points) Question 13 UnsavedMost common financial ratios are based on information taken from a firm’s balance sheet andincome statement.Question 13 options:TrueFalseSaveQuestion 14 (2 points) Question 14 UnsavedThe closer the debt ratio is to one, the greater the firm’s reliance on debt.Question 14 options:TrueFalseSaveQuestion 15 (2 points) Question 15 UnsavedCathy purchased several corporate bonds from a large corporation five years ago. Cathyrecently lost her job and has decided to sell the corporate bonds. Since the bonds have amaturity date that is 10 years from the date of purchase, Cathy would not be able to sell herbonds to other investors.Question 15 options:TrueFalseSaveQuestion 16 (2 points) Question 16 UnsavedOne disadvantage of equity financing is that it locks the firm into making fixed payments.Question 16 options:TrueFalseSaveQuestion 17 (2 points) Question 17 UnsavedEquity financing yields the same tax benefits for a company that debt financing yields.Question 17 options:TrueFalseSaveQuestion 18 (2 points) Question 18 UnsavedFinancial leverage is the use of debt in a firm’s capital structure.Question 18 options:TrueFalseSaveQuestion 19 (2 points) Question 19 UnsavedU.S. Treasury Bills are marketable, highly liquid short-term securities and are considered verysafe.Question 19 options:TrueFalseSaveQuestion 20 (2 points) Question 20 UnsavedThe Dodd-Frank Act requires large firms in the financial sector toQuestion 20 options:hold more debt and less equity.participate in deleveraging.rely on high financial leverage.increase their debt-to-equity ratio.SaveQuestion 21 (2 points) Question 21 UnsavedFinancial markets make it possible for companies to obtain financial resources.Question 21 options:TrueFalseSaveQuestion 22 (2 points) Question 22 UnsavedThe Federal Deposit Insurance Corporation was established by the Banking Act of 1933 andinsures depositors against financial loss if a bank fails.Question 22 options:TrueFalseSaveQuestion 23 (2 points) Question 23 UnsavedJack Richman works in senior management for Roan & Wright, Inc. During a recent strategysession, Jack learned that the company was on the verge of announcing a major technologicalbreakthrough. He’s confident that once the breakthrough is announced to the public, the price ofthe company’s stock will surge dramatically. If Jack buys more of his company’s stock before theannouncement, his actions could be investigated by the Securities and Exchange Commission.Question 23 options:TrueFalseSaveQuestion 24 (2 points) Question 24 UnsavedCommon stock is the basic form of ownership in a corporation.Question 24 options:TrueFalseSaveQuestion 25 (2 points) Question 25 UnsavedA bond is a long-term debt instrument issued by a corporation or government entity.Question 25 options:TrueFalseSaveQuestion 26 (2 points) Question 26 UnsavedDan has $6,000 that he would like to invest. He wants to diversify his investment, but feels that$6,000 isn’t enough to buy many different securities. Besides, he doesn’t know much aboutpicking good stocks and doesn’t want the hassle of trying to make investment decisions. Dan islikely to find mutual funds an attractive way to invest his $6,000.Question 26 options:TrueFalseSaveQuestion 27 (2 points) Question 27 UnsavedThe stocks of Apple, Google and Microsoft are listed on the NASDAQ exchange.Question 27 options:TrueFalseSaveQuestion 28 (2 points) Question 28 UnsavedThe United States is the only nation with well-established securities exchanges set up to tradesecurities on the secondary market.Question 28 options:TrueFalseSaveQuestion 29 (2 points) Question 29 UnsavedThe Dow Jones Industrial Average, also known as the Dow, is a security exchange wherestocks are traded.Question 29 options:TrueFalseSaveQuestion 30 (2 points) Question 30 UnsavedThe _____ created the Federal Reserve System, with its primary responsibility being to overseeour nation’s banking system.Question 30 options:Banking Act of 1933Federal Reserve Act of 1913Glass-Steagall ActSecurities Act of 1933SaveQuestion 31 (2 points) Question 31 UnsavedCommon stockholders have all of the following rights EXCEPTQuestion 31 options:a preemptive right.the right to repayment of the rights.a right to residual claim on assets.SaveQuestion 32 (2 points) Question 32 UnsavedThe Price/Earnings ratioQuestion 32 options:develops an investor’s knowledge of the prices of various stocks in a single of little value to investors these days due to the fact that market values far exceed important to investors because they want this ratio to be a multiple that shows investors how many times over earnings a particular stock price istrading.SaveQuestion 33 (2 points) Question 33 UnsavedThe Securities Exchange Act of 1934 established the Securities and Exchange Commission andgave it broad powers to oversee the securities industry.Question 33 options:TrueFalseSaveQuestion 34 (2 points) Question 34 UnsavedThe Securities and Exchange Commission is the federal agency that has the authority toinvestigate allegations of illegal insider trading.Question 34 options:TrueFalseSaveQuestion 35 (2 points) Question 35 UnsavedThe primary purpose of the Federal Reserve Act of 1913 was to stabilize the nations’s bankingsystem.Question 35 options:TrueFalseSaveQuestion 36 (2 points) Question 36 UnsavedOne of the first things you can do in your effort to prepare a budget is to track and analyze yourpersonal financial decisions for a few weeks, including what you take in and what you spend,and how you use your money.Question 36 options:TrueFalseSaveQuestion 37 (2 points) Question 37 UnsavedCandace just purchased an iced coffee from the local coffee shop. Candace’s purchase is anexample of a nondiscretionary payment.Question 37 options:TrueFalseSaveQuestion 38 (2 points) Question 38 UnsavedThe Federal Deposit Insurance Corporation is an independent government agency that protectsindividual investments in the stock market.Question 38 options:TrueFalseSaveQuestion 39 (2 points) Question 39 UnsavedA key to financial security is the creation of a “safety net.” This “safety net” should be able tocover six months of your expenses.Question 39 options:TrueFalseSaveQuestion 40 (2 points) Question 40 UnsavedYour ability to purchase goods or resources without making immediate payment is known as aninvestment.Question 40 options:TrueFalseSaveQuestion 41 (2 points) Question 41 UnsavedThe benefits of having a credit card include not having to carry cash and the opportunity toestablish a credit history.Question 41 options:TrueFalseSaveQuestion 42 (2 points) Question 42 UnsavedThe Dodd-Frank Act created the Consumer Financial Protection Bureau to provide consumerswith information that would assist them in making a decision on the best credit card for theconsumer.Question 42 options:TrueFalseSaveQuestion 43 (2 points) Question 43 UnsavedRecently your Aunt Gertie asked you about investing $10,000. During the course of yourconversation, she mentioned that she was looking for a maximum level of safety. Based on thisinformation, you suggest you invest the $10,000 in corporate stock.Question 43 options:TrueFalseSaveQuestion 44 (2 points) Question 44 UnsavedIt is never a good idea to have a diversified portfolio because your investments are spread outand can result in increased risk.Question 44 options:TrueFalseSaveQuestion 45 (2 points) Question 45 UnsavedApril is addicted to her Venti Caramel Frappe, and she has one every single day. When shecalls home to talk to dad about needing more money for “school supplies,” he’s like, “Whoa.” Soshe has to explain to dad that she has a pretty high “latte factor.” How does the conversationend, if it ends as a positive step in April’s life?Question 45 options:April tells her dad that her Frappe is a nondiscretionary cost; therefore she’ll be “waiting down atthe Western Union, if you know what I mean.”April’s dad explains to her that her “latte factor” needs to diminish, reminds her that she is livingon a student income, and tells her to get a job as he cuts her off from her college fund.April decides that her Frappe-a-day is risky for her financial health, and decides to change herhabits. In exchange for that commitment, daddy, who loves her dearly, emails her a link to abudgeting tool to help her better manage what she has.April’s dad counsels her to apply for a credit card so that she can build credit whilesimultaneously getting her daily fix.SaveQuestion 46 (2 points) Question 46 UnsavedWhat is one of the reasons why the Dodd-Frank Act created the Consumer Financial ProtectionBureau?Question 46 options:to protect the credit card companies from bad debtto give consumers the opportunity to buy a copy of their credit score before applying for a creditcardto pre-approve consumers for credit cardsto make it easier for consumers to compare the features and costs of credit cardsSaveQuestion 47 (2 points) Question 47 UnsavedAfter a review of your friend’s current financial situation, you discovered she was carrying a$4,500 credit card balance with an APR of 22%. The best advice you can give to your friend istoQuestion 47 options:eliminate using her credit card for nonessential purchases.switch credit card companies, since many companies offer benefits like frequent-flier miles.keep using the card and not to worry about the balance, since all interest is tax a high priority on eliminating her credit card balance.SaveQuestion 48 (2 points) Question 48 UnsavedWhy is investing earlier in life preferable?Question 48 options:so you can stop while you’re buying your hometo take advantage of the compounding effectto use that money for a new carso you can retire when you’re 40 years oldSaveQuestion 49 (2 points) Question 49 UnsavedAll contributions to a Roth IRA are _____ but withdrawals are _____.Question 49 options:tax-free; taxabletaxable; tax-freepassive; tax-freetax-free; subject only to state taxesSaveQuestion 50 (2 points) Question 50 UnsavedOne advantage of participating in a company-sponsored retirement plan isQuestion 50 options:you always pay taxes on these contributions during the year you are allowed to contribute only half as much as you would contribute to an IRA, so you get tokeep more of your earnings.time value of money does not apply.companies will often participate in a matching process, where they will contribute a percentageof the amount you contribute.

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