The ________ motive for holding cash is the need for a safety supply to act as a financial reserve against unexpected events. A) Transactional B) Precautionary C) Speculative D) Intuitive ANSWER B
Date: September 19th, 2020
The usual sources of capital for investing projects include all of the following EXCEPT: A) LIBOR. B) Retained Earnings. C) Bank Loans. D) Domestically Marketed Stocks and Bonds. ANSWER A
Date: September 19th, 2020
The interest rate on Eurodollar loans tends to be based on A) Eurobonds B) Forward rates C) Spot rates D) LIBOR ANSWER D
Date: September 19th, 2020
The three motives for holding cash are: A) float reduction, precautionary, and speculative. B) buffer stock, speculative, and transactional. C) speculative, transactional, and precautionary. D) float reduction, buffer stock, and transactional. E) convenience, transactional, and precautionary. ANSWER C
Date: September 19th, 2020
What is a danger in using only short term borrowing? A) Higher rates than long term borrowing B) Lower fee per loan C) Cost of borrowing can increase D) Less flexibility ANSWER C
Date: September 19th, 2020
What is an advantage of short term lending for banks? A) New fees every loan B) More flexibility C) Locked in rates D) Increased clients ANSWER A
Date: September 19th, 2020
The increased risk of doing business in a foreign country can be offset by: A) Lack of growth. B) Arbitrage. C) Diversification. D) Expropriation. ANSWER C
Date: September 19th, 2020
A(n) ________ is an annotation put on a checking account preventing funds on deposit that can be spent. A) Hold B) Stop C) Float D) ETF ANSWER A
Date: September 19th, 2020
________ can be found where cost of receivables is equal to the revenues from increased sales. A) Accounts payable B) Accounts receivable C) Optimal amount of credit D) Cost of extending credit ANSWER C
Date: September 19th, 2020
The increased risk of foreign investments is most often incorporated in capital budgeting models by A) international diversification. B) hedging with financial derivatives. C) reducing market risk. D) calculating certainty equivalents. E) adjusting the discount rate. ANSWER E
Date: September 19th, 2020
