1) Ideally, which of the following type of assets should be financed with long-term financing?
A. Fixed assets and temporary current assets
B. Fixed assets only
C. Fixed assets and permanent current assets
D. Temporary and permanent current assets
2) A “normal” term structure of interest rates would depict
A. long-term rates higher than short-term rates.
B. short-term rates higher than long-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.
3) 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
A. market segmentation theory.
B. expectations hypothesis.
C. liquidity premium theory.
D. theory of industry supply and demand for bonds.
4) The term structure of interest rates
A. plots returns for securities of different risk.
B. changes daily to reflect current competitive conditions in the money and capital markets.
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.
5) Cash flow does not rely on which of the following?
The Essay on Short Term And Long Term Memory
Short Term and Long Term Memory It is impossible to imagine any kind of mental activity without brains ability to store information. This ability is commonly referred to as memory. As our knowledge about mental properties of human mind progressed, scientists learned to distinguish two specific types of memory short and long term. Short term memory enables the brain to operate with the flow of ...
A. the monetary policy of the Federal Reserve
B. the payment patterns of customers
C. the speed at which suppliers and creditors process checks
D. the efficiency of the banking system
6) One of the first considerations in cash management is
A. synchronization of cash inflows and cash outflows.
B. to have as much cash as possible on hand.
C. profitability.
D. to put any excess cash into accounts receivable.
7) Hedging
A. increases risk.
B. is a way to protect your accounts receivable position.
C. is a legal agreement to buy or sell a financial futures contract.
D. can be carried out with a futures contract.
8) 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?
A. a decrease in inventories which are earning a 17.6% return.
B. a reduction in marketable securities which are earning a return of 14.2%.
C. an increase in bank loans that would cost us 11.5%.
D. an increase in accounts payable that would cost our firm 15%.
