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Exam 17: Financial Management Appendix C Managing Risk

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Question 41

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According to the risk/return tradeoff,the higher the risk the lower the interest rate charged by the lender.

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Question 42

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A ______refers to a line of credit that is guaranteed by the bank.

A) collateral trust fund
B) commercial credit agreement
C) revolving credit agreement
D) contract credit agreement

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Question 43

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To improve cash flow and profitability,effective managers attempt to minimize the firm's investment in inventory.

As a finance manager at All Sports Communication,Charlie worries about the firm's borrowing and debt repayment requirements for the next year.He knows the benefit of estimating All Sports' money disbursements and short-term investment expectations.Facing these concerns,a(n) ______would provide Charlie with valuable information.

New World Chemical does not offer customers a cash discount for early payment of their accounts receivable.As a result,most customers wait to pay their bill on the last day before late penalties are charged.These customers apparently understand the:

Liberty Electronics is uncertain about their revenues,costs,and expenditures for the coming year.This firm would benefit from developing a:

The duties and responsibilities of a financial manager are virtually identical to the duties and responsibilities of an accountant.

All of the following are primary areas of concern for financial managers except:

Vitale Jewelers obtains needed short-term funds by selling its accounts receivable to the Friendly Finance Company.Friendly Finance usually pays Vitale about 80% of the value of the receivables.Vitale Jewelers utilizes______ as a means of raising short-term funds.

Describe some of the operational needs for which funds must be readily available to a company.

Which of the following presents an effective technique to improve cash management?

The first time a company offers to sell its stock to the general public is called an initial private label (IPL).

Working in the finance department of a firm that operates a chain of dry cleaning and tailoring shops,Demonte discovered that tax management is:

When Libertine Industries renegotiated their loan agreement,they borrowed an additional $2 million.The new loan requires Libertine to repay the new amount in nine months.Liberty's activity represents______ financing.

The two primary sources of long-term business financing are government loans and debt capital.

Suppliers prefer to offer trade credit to customers with poor credit ratings or no credit history.

As a financial manager of a small firm,Jerry needs to determine how much his company will have to borrow in the coming months,and when the borrowed funds will be needed.The preparation of a cash budget will help.

An effective budget requires:

Selling accounts receivable to obtain short-term funds is called:

Murray is the manager of Oh! Canada Sporting Goods.He is concerned that his cash expenditures have been exceeding his cash receipts for the last six months.Oh! Canada is suffering from a(n) ______problem.