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Practical Financial Management 8th Edition

Test Bank For Practical Financial Management 8th Edition by William R. Lasher

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8th Edition
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Test Bank For Practical Financial Management 8th Edition by William R. Lasher

1. Which financial institution is not involved in the indirect method of financial intermediation?
a.  Banks
b.  Investment bankers
c.  Mutual funds
d.  Pension funds
ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:22 AM

2. Which of the following is not considered to be an institutional investor?
a.  Governments
b.  Pension funds
c.  Insurance companies
d.  Mutual funds
ANSWER:   a
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:22 AM

3. Typically debt financing can be either short- or long-term, whereas equity financing is almost always long-term, the word “term” meaning:
a.  the time between a security’s issue and its retirement.
b.  the duration specified on all debt and equity securities.
c.  the amount of time necessary to realize the required return on the investment.
d.  All of the above
ANSWER:   a
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:23 AM

4. The term of an investment can be described as either:
a.  long or short, long-term meaning any duration longer than five years.
b.  intermediate or short, intermediate being any duration longer than one year.
c.  long, intermediate, or short, intermediate being any duration longer than one year but shorter than five years.
d.  None of the above
ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:27 AM

5. The principal differences between capital markets and money markets are that:
a.  money and capital markets deal in the same securities, the only difference is term.
b.  both markets deal in short-term debt securities; however, capital markets deal also in equity securities which have an indefinite term.
c.  money markets deal only in short-term government debt.
d.  capital markets deal in long-term debt and equity securities, while money markets deal only in short-term debt.
ANSWER:   d
POINTS:   1
DIFFICULTY:   Moderate
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:28 AM

6. Which of the following is/are a primary market transaction(s)?
a.  A company issues new stock.
b.  A company issues new bonds.
c.  An investor asks his broker to purchase 1,000 shares of Microsoft common stock from another stockholder.
d.  All of the above
e.  a. and b.
ANSWER:   e
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:29 AM

7. The primary function of financial markets is to:
a.  ensure that interest and dividend payments are made to stockholders and bondholders.
b.  facilitate the payment for goods and services between producers and consumers.
c.  facilitate the movement of cash from savers to companies that need money.
d.  financial markets perform all of these functions.
ANSWER:   c
POINTS:   1
DIFFICULTY:   Moderate
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:31 AM

8. Which of the following best describes the concept of maturity matching?
a.  Companies use funds from selling stocks to fund long-term projects and funds from selling bonds to fund short-term projects.
b.  Companies try to match the term of a project with the maturity of the financing that pays for it.
c.  Companies use funds from selling bonds to fund long-term projects and funds from selling stocks to fund short-term projects.
d.  Companies always use bonds to finance both short- and long-term projects because stocks have no maturity and therefore cannot be matched to the length of projects.
e.  None of the above describes the concept of maturity matching.
ANSWER:   b
POINTS:   1
DIFFICULTY:   Moderate
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:31 AM

9. The sale of a 10-year bond by one investor to another investor would be considered a transaction that takes place in the:
a.  primary capital market.
b.  primary money market.
c.  secondary capital market.
d.  secondary money market.
e.  None of the above
ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:33 AM

10. Financial markets have the basic function of:
a.  providing liquidity.
b.  providing signaling and information.
c.  matching savers and users of funds.
d.  All the above
ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:34 AM

11. Financial markets include:
a.  capital markets.
b.  money markets.
c.  primary markets.
d.  secondary markets.
e.  All of the above
ANSWER:   e
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:36 AM

12. Financial intermediaries include:
a.  stock brokers.
b.  banks.
c.  securities dealers.
d.  All of the above
ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:37 AM

13. ____ markets deal in long-term securities having maturities greater than one year.
a.  Credit
b.  Money
c.  Super
d.  Capital
ANSWER:   d
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:38 AM

14. ____ markets deal in short-term securities having maturities of one year or less.
a.  Credit
b.  Money
c.  Capital
d.  a and b only
ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:40 AM

15. In the ____ market, the firm receives the proceeds from the sale of its securities.
a.  over-the-counter
b.  secondary
c.  fully integrated
d.  none of the above
ANSWER:   d
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:41 AM

16. Financial intermediaries are associated with:
a.  investment banks.
b.  direct transfers.
c.  indirect transfers.
d.  only money market transactions.
e.  b and c
ANSWER:   c
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:42 AM

17. Financial intermediaries:
a.  make indirect transfers from investors to firms.
b.  pass securities through to investors.
c.  include stockbrokers.
d.  facilitate direct transfers from investors to firms.
ANSWER:   a
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:44 AM

18. The main purpose of an economy’s financial system is to facilitate the transfer of funds from:
a.  financial middlemen to financial intermediaries.
b.  consumer savers to business investors.
c.  primary claimholders to secondary claimholders.
d.  lenders to financial intermediaries.
ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:45 AM

19. Money markets deal in securities having maturities of ____; capital market securities have maturities ____.
a.  less than 18 months, greater than 18 months
b.  one year or less, greater than one year
c.  less than 9 months, greater than 9 months
d.  less than 6 months, greater than 6 months
ANSWER:   b
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:46 AM

20. An investment banker is generally thought to be qualified to advise a corporation on a variety of matters, including all the following except:
a.  long range financial planning.
b.  the marketing of securities.
c.  the timing of securities.
d.  the firm’s new product marketing decisions.
ANSWER:   d
POINTS:   1
DIFFICULTY:   Easy
QUESTION TYPE:   Multiple Choice
HAS VARIABLES:   False
LEARNING OBJECTIVES:   FINA.LASH.17.05.01 – The Financial System
NATIONAL STANDARDS:   BUSPROG: Analytic – BUSPROG: Analytic skills: Statistics and Management Science
TOPICS:   The Financial System
KEYWORDS:   Bloom’s: Knowledge
DATE CREATED:   5/26/2015 8:57 AM
DATE MODIFIED:   7/8/2015 10:48 AM

 

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