FIN 200 Week 6 CheckPoint Quiz
Uploaded by ddscoolz on Feb 22, 2013
1) Ideally, which of the following type of assets should be financed with long-term financing?
WriteLetter('1');A. Fixed assets only
WriteLetter('2');B. Temporary and permanent current assets
WriteLetter('3');C. Fixed assets and permanent current assets
WriteLetter('4');D. Fixed assets and temporary current assets
2) When the yield curve is downward sloping, generally a financial manager should
WriteLetter('1');A. expect an economic boom
WriteLetter('2');B. utilize long-term financing
WriteLetter('3');C. utilize short-term financing
WriteLetter('4');D. increase investment and level of financing overall
3) 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?
WriteLetter('1');A. No external financing is required.
WriteLetter('2');B. $100,000
WriteLetter('3');C. $300,000
WriteLetter('4');D. $200,000
4) 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
WriteLetter('1');A. expectations hypothesis.
WriteLetter('2');B. segmentation theory.
WriteLetter('3');C. market average rate theory.
WriteLetter('4');D. liquidity premium theory.
5) Cash flow does not rely on which of the following?
WriteLetter('1');A. the payment patterns of customers
WriteLetter('2');B. the monetary policy of the Federal Reserve
WriteLetter('3');C. the speed at which suppliers and creditors process checks
WriteLetter('4');D. the efficiency of the banking system
6) Which of the following is not a method of speeding up collections?
WriteLetter('1');A. Lock-box system.
WriteLetter('2');B. Regional collection centers.
WriteLetter('3');C. Extended disbursement float.
WriteLetter('4');D. All of these are methods for speeding up collections.
7) We expect that we can receive annual incremental income after taxes of $15,000 which includes an adjustment for uncollectible accounts. What is the maximum commitment to A/R we should be willing to assume if our firm's minimum required after-tax return is 12%?
WriteLetter('1');A. $18,000
WriteLetter('2');B. $125,000
WriteLetter('3');C. $168,000
WriteLetter('4');D. $180,000
8) The problem in stretching out the maturity of marketable securities is that
WriteLetter('1');A. you are legally locked in until the maturity date.
WriteLetter('2');B. there is greater possibility of loss.
WriteLetter('3');C. long-term rates higher than short-term rates.
WriteLetter('4');D. interest rates are generally lower.