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Exam 18: Financial Management

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Question 121

True/False

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Venture capitalists expect lower than average returns on their investment since they are exposed to little risk.

A) True
B) False

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Question 122

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The types of organizations which can issue bonds are privately and publicly held corporations, exclusively.

A) True
B) False

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Question 123

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Securitas Financial Services is contemplating purchasing and installing a new, expensive computer network. This is the type of expenditure that would be included in a(n)

An example of a firm using leverage to its advantage is a firm that borrows funds at 9% and invests those funds to earn 14%.

Jason manages credit and collections at Barkatorium Pet Supplies. He is responsible for accounts receivable and accounts payable. These activities suggest that Jason's job is in financial management.

Corporations must comply with the Securities and Exchange Commission (SEC) requirements in order to sell their stock publicly.

The long-term financial forecast gives top management some sense of the profit potential of various strategic decisions.

As Miles considers approaching a venture capital firm to provide funding for his new mobile app, he should realize that a venture capital firm will

Akiko realizes the importance of developing a ________ for her interior design business. Akiko understands the importance of appropriately allocating resources in order to achieve the goals of her firm.

Which business function involves credit management/collecting funds from customers?

With added competition, firms prefer not to offer the availability of credit sales to their customers.

A cash budget helps managers anticipate borrowing, debt repayment, operating expenses, and short-term investment opportunities.

An unsecured corporate bond is known as a debenture bond.

Based on the time value of money, $100 received a year from today is worth more than $100 received today.

Financial managers are responsible for the management of accounts receivable and accounts payable.

Seedling Plant Science invented a drought resistant grass seed that only needs watering three times each year. In order to expand distribution worldwide, the company whose product produces lush green foliage needs serious funding. The handful of seed scientists that own the company are seeking ________, but understand that they will relinquish a sizeable share of ownership in order to obtain the funds.

Undercapitalization refers to the problem of insufficient start-up funds.

Family and friends represent problem-free sources of financing for most small businesses.

Effective financial managers evaluate customers' ability to pay for merchandise purchased on credit.

Which of these is a common source of long-term financing for a corporation?