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- Download: http://solutionzip.com/downloads/20-mcq-working-capital-management-is-primarily-concerned/
- Question 1 of 20
- Working capital management is primarily concerned with the management and financing of:
- A. cash and inventory.
- B. current assets and current liabilities.
- C. current assets.
- D. receivables and payables.
- Question 2 of 20
- Frisch Fish Corp expects net income next year to be $600,000. Inventory and accounts receivable will have to be increased by $300,000 to accommodate this sales level. Frisch will pay dividends of $400,000. How much external financing will Frisch Fish need assuming no organically generated increase in liabilities?
- A. No external financing is required.
- B. $100,000
- C. $200,000
- D. $300,000
- Question 3 of 20
- Retail companies like Target and Limited Brands are more likely to have:
- A. stable sales and earnings per share.
- B. cyclical sales but less volatile earnings per share.
- C. cyclical sales and more volatile earnings per share.
- D. cyclical sales but stable accounts receivable and inventory.
- Question 4 of 20
- The term structure of interest rates:
- A. changes daily to reflect current competitive conditions in the money and capital markets.
- B. plots returns for securities of different risk.
- C. shows the relative interest spread between bonds with different risk ratings such as AAA, AA, A, BBB, etc.
- D. depicts interest rates for T-bills over the last year.
- Question 5 of 20
- A “normal” term structure of interest rates would depict:
- A. short-term rates higher than long-term rates.
- B. long-term rates higher than short-term rates.
- C. no general relationship between short- and long-term rates.
- D. medium rates (1-5 years) lower than both short-term and long-term rates.
- Question 6 of 20
- Which of the following combinations of asset structures and financing patterns is likely to create the most volatile earnings?
- A. Illiquid assets and heavy short-term borrowing
- B. Illiquid assets and heavy long-term borrowing
- C. Liquid assets and heavy long-term borrowing
- D. Liquid assets and heavy short-term borrowing
- Question 7 of 20
- Genetech has $2,000,000 in assets, have decided to finance 30% with long-term financing (13% rate) and 70% with short-term financing (9%) rate. What will be their annual interest costs?
- A. $78,000
- B. $126,000
- C. $440,000
- D. $204,000
- Question 8 of 20
- What is generally the largest source of short-term credit small firms?
- A. Bank loans
- B. Commercial paper
- C. Installment loans
- D. Trade credit
- Question 9 of 20
- The cost of not taking the discount on trade credit of 2/20, net 60 is equal to:
- A. 18.36%.
- B. 16.32%.
- C. 18.00%.
- D. 17.41%
- Question 10 of 20
- LIBOR is:
- A. a resource used in production.
- B. an interest rate paid on Eurodollar loans in the London market.
- C. an interest rate paid by European firms when they borrow Eurodollar deposits from U.S. banks.
- D. the interest rate paid by the British government on its long-term bonds.
- Question 11 of 20
- In determining the cost of bank financing, which is the important factor?
- A. Prime rate
- B. Nominal rate
- C. Effective rate
- D. Discount rate
- Question 12 of 20
- Holland Construction Co. has an outstanding 180-day bank loan of $400,000 at an annual interest rate of 9.5%. The company is required to maintain a 15% compensating balance in its checking account. What is the effective interest rate on the loan? Assume the company would not normally maintain this average amount.
- A. 11.18%
- B. 19.00%
- C. 22.35%
- D. 8.08%
- Question 13 of 20
- Which of the following is the largest category of asset-backed securities?
- A. Student Loans
- B. Automobile Loans
- C. Home Equity Loans
- D. Manufactured Housing Loans
- Question 14 of 20
- What is the effective rate on an $10,000 installment loan with bi-monthly payments, $1,600 in interest, for 2 years?
- A. 16%
- B. 7.4%
- C. 29.5%
- D. 14.8%
- Question 15 of 20
- During the next ten years, the major threat to the dominance of the U.S. money and capital markets will come from:
- A. Russia’s difficulty in transforming its economy into a capitalistic one.
- B. Japan’s prolonged recession and banking crisis.
- C. the Euro-zone countries comprising the European Monetary Union and a single currency.
- D. the huge Chinese economy and its billion plus people.
- Question 16 of 20
- In general when interest rates are expected to rise, financial managers:
- A. try to lock in long-term financing at low cost.
- B. balance the company’s debt structure with more short-term debt and less long-term debt.
- C. accept more risk.
- D. rely more on internal sources of funds rather than external sources.
- Question 17 of 20
- The major supplier of funds for investment in the whole economy is:
- A. businesses.
- B. households.
- C. government.
- D. financial institutions.
- Question 18 of 20
- What type of trading accounts for over 90% of stocks traded on the Chicago and Pacific regional exchanges?
- A. Dealer Trading
- B. Dual Trading
- C. Options Trading
- D. None of the above
- Question 19 of 20
- The Securities Act of 1933 is primarily concerned with:
- A. original issues of securities.
- B. secondary trading of securities.
- C. national securities market.
- D. protecting customers of bankrupt securities firms.
- Question 20 of 20
- The belief in the efficient market hypothesis would lead to the following:
- A. attempting to time the market
- b. increase in index in funds
- c. using technical analysis and trends in the market.
- d. investing based on the emotional climate.
- Download: http://solutionzip.com/downloads/20-mcq-working-capital-management-is-primarily-concerned/
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