QUESTION What differentiates M1 from M2? A) M1 is a much broader definition of the money supply than M2. B) M2 includes only currency in its definition of the money supply. C) M1 is the much more commonly used measure of the money supply. D) M1 includes assets such as mutual funds and money market […]
Date: September 3rd, 2020
QUESTION What are borrowers required to sign when accepting a long-term loan? A) term-loan agreement B) loan-collateral agreement C) commercial paper D) long-term line of credit E) term of trade ANSWER Answer: A Explanation: A) Long-term loans require that borrowers sign a term-loan agreement, a promissory note indicating specific installments, such as monthly or […]
Date: September 3rd, 2020
QUESTION If your company needs a large amount of money and must have a long-term note but is unable to obtain a long-term loan, what might be the next best thing for it? A) to obtain a short-term loan B) to obtain a revolving credit agreement C) to obtain a line of credit D) to […]
Date: September 3rd, 2020
QUESTION Which of the following is an example of equity financing? A) buying secured bonds B) issuing unsecured bonds C) receiving venture capital D) issuing commercial paper E) receiving a transaction loan ANSWER Answer: C Explanation: C) Equity financing involves selling ownership in the firm. This may be done by selling stock, by retaining […]
Date: September 3rd, 2020
QUESTION Which of the following is considered a source of short-term financing? A) debt financing B) equity financing C) trade credit D) secured bond E) unsecured bond ANSWER Answer: C Explanation: C) Sources of short-term financing are trade credit, short-term loans, factoring, and commercial paper. Sources of long-term financing are long-term loans, debt financing, […]
Date: September 3rd, 2020
QUESTION When a bond is issued, what are the terms of the lending agreement known as? A) term-loan agreement B) indenture terms C) promissory note terms D) commercial paper terms E) revolving credit agreement ANSWER Answer: B Explanation: B) The terms of the lending agreement when a bond is issued are known as indenture […]
Date: September 3rd, 2020
QUESTION Dorothy is in her late twenties and has a mid-level management job. As an average consumer, which of the following does she likely need in order to purchase a big-ticket item such as a new car? A) co-signers B) intangible assets C) letters of reference D) credit E) stock ANSWER Answer: D Explanation: […]
Date: September 3rd, 2020
QUESTION Bill White is starting up a new company. He receives money for his business from some wealthy individuals interested in his business in exchange for some ownership. What is this money known as? A) venture capital B) secured bonds C) public offering D) indenture terms E) commercial paper ANSWER Answer: A Explanation: A) […]
Date: September 3rd, 2020
QUESTION Pulp Faction is a supplier of paper products that is giving a new buyer short-term credit. What are the conditions it is imposing called? A) promissory note B) terms of trade C) trade credit D) commercial paper E) net period ANSWER Answer: B Explanation: B) Terms of trade refers to the conditions the […]
Date: September 3rd, 2020
QUESTION What is the technique called that uses borrowed funds to increase a firm’s rate of return? A) private placement B) cost of capital C) financial leverage D) revolving credit agreement E) trade credit ANSWER Answer: C Explanation: C) Financial leverage is the technique of using borrowed funds to increase a firm’s rate of […]
Date: September 3rd, 2020
