1) When the yield curve is downward sloping, generally a ...
1) When the yield curve is downward sloping, generally a financial manager should | |
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|[pic]A. |
|[pic] |
|utilize long-term financing |
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|[pic]B. |
|[pic] |
|expect an economic boom |
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|[pic]C. |
|[pic] |
|increase investment and level of financing overall |
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|[pic]D. |
|[pic] |
|utilize short-term financing |
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|2) Permanent current assets are not a factor in a manager's decision making process when all current assets will be |
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|[pic]A. |
|[pic] |
|long-term in nature. |
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|[pic]B. |
|[pic] |
|financed by short-term debt. |
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|[pic]C. |
|[pic] |
|self-liquidating. |
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|[pic]D. |
|[pic] |
|internally financed. |
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|3) The theory of the term structure of interest rates which suggests that long-term rates are determined by the average of |
|short-term rates expected over the time that a long-term bond is outstanding is the |
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|[pic]A. |
|[pic] |
|segmentation theory. |
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|[pic]B. |
|[pic] |
|expectations hypothesis. |
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|[pic]C. |
|[pic] |
|liquidity premium theory. |
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|[pic]D. |
|[pic] |
|market average rate theory. |
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|4) Some analysts believe that the term structure of interest rates is determined by the behavior of various types of financial |
|institutions. This theory is called the |
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|[pic]A. |
|[pic] |
|market segmentation theory. |
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|[pic]B. |
|[pic] |
|expectations hypothesis. |
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|[pic]C. |
|[pic] |
|liquidity premium theory. |
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|[pic]D. |
|[pic] |
|theory of industry supply and demand for bonds. |
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|5) One of the first considerations in cash management is |
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|[pic]A. |
|[pic] |
|synchronization of cash inflows and cash outflows. |
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|[pic]B. |
|[pic] |
|to have as much cash as possible on hand. |
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|[pic]C. |
|[pic] |
|profitability. |
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|[pic]D. |
|[pic] |
|to put any excess cash into accounts receivable. |
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|6) Cash flow does not rely on which of the following? |
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|[pic]A. |
|[pic] |
|the monetary policy of the Federal Reserve |
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|[pic]B. |
|[pic] |
|the payment patterns of customers |
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|[pic]C. |
|[pic] |
|the speed at which suppliers and creditors process checks |
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|[pic]D. |
|[pic] |
|the efficiency of the banking system |
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|7) Assuming that we can earn a 13.5% return on accounts receivable, which of the following actions to finance an increase in our |
|accounts receivable balance would be optimal? |
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|[pic]A. |
|[pic] |
|a decrease in inventories which are earning a 17.6% return. |
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|[pic]B. |
|[pic] |
|an increase in bank loans that would cost us 11.5%. |
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|[pic]C. |
|[pic] |
|a reduction in marketable securities which are earning a return of 14.2%. |
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|[pic]D. |
|[pic] |
|an increase in accounts payable that would cost our firm 15%. |
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|8) The problem in stretching out the maturity of marketable securities is that |
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|[pic]A. |
|[pic] |
|long-term rates higher than short-term rates. |
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|[pic]B. |
|[pic] |
|there is greater possibility of loss. |
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|[pic]C. |
|[pic] |
|you are legally locked in until the maturity date. |
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|[pic]D. |
|[pic] |
|interest rates are generally lower. |
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