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Study Resources (Business Management)

    Mortgage pass-through securities are relatively safe, even when loans are made to borrowers with poor credit ratings.     Bonds vary considerably in terms of risk. One tool used by bond investors to assess the risk of a bond is its so-called risk rating.     The credit crisis came about partly because of subprime mortgages.       Bonds.
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    The process used by an insurance company to determine whom to insure and how much to charge is called ________. a.a premium b.underwriting c.a insuring agreement d.indemnity       Which of the following financial institutions would invest the greatest percentage of its assets in common stocks and other long-term investments? a.commercial bank b.pension fund c.credit union d.property and liability insurance company       What.
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    A(n) _____ is a transaction in which one company buys another. a.acquisition b.Merger c.takeover d.Synergy       Two types of divestitures are _____. a.sell-offs and trade-offs b.trade-offs and spin-offs c.buy-offs and spin-offs d.sell-offs and spin-offs         In a sense, a(n) ________ is the reverse of a merger. a.tender offer b.LBO c.divestiture d.acquisition       TRUE/FALSE   Financial managers are responsible for increasing profits to shareholders.     The treasurer is the chief financial officer of.
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  5.Explain how a business opportunity differs from a business idea. 6.Give an example of a change that has occurred or is about to occur in your neighborhood. Discuss any business opportunities this change might create. 7.List five business opportunities in your neighborhood and the need(s) or want(s) each would satisfy. Determine whether.
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    Regulation of U.S. financial markets is primarily a function of the federal government; states do not regulate banks in any way.     When the Fed buys government securities, it adds to the supply of money and credit, which causes a reduction in interest rates.       U.S. banks make few foreign investments due to regulatory.
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  MATCHING   Complete the following using the terms listed. a.venture capitalists b.private placements c.factoring d.capital investment analysis e.debt capital f.equity capital g.financial plan h.leveraged buyout i.private equity funds j.divesture k.marketable securities l.financial manager m.tender offer n.trade credit o.leverage p.capital structure q.asset intensity r.bonds     The technique of increasing the rate of return on an investment by financing it with borrowed funds is called _____.     A(n) is a document that specifies the funds a.
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    On a balance sheet, total assets must always equal the sum of liabilities and owners’ equity.       Assets are shown in ascending order of liquidity.     The right side of the balance sheet lists claims against assets.     The three principal financial statements are the balance sheet, income statement, and the statement of retained earnings.     When examining.
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  1.Visit http://www.Entrepreneur.com and find the most recent list of the top 10 franchises.  Compare it with the list included in the text.  What, if anything, has changed?  Why do you think the change has occurred? 1.What type of franchise is Snap-on? 2.Using the Web sites listed under Case Sources, identify each of.
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    If a firm has numerous investment opportunities and wishes to finance some of them with equity funding, it will likely pay large dividends to shareholders.     Short-term sources of funds are loans that are repaid within one year.     Interest rates on short-term funds move up and down frequently.       Trade credit is a major source.
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    Tom just bought a bond from United Pet Group. This bond is only backed by the financial reputation of the company. What type of bond did Tom buy? a.debenture b.secured bond c.CD d.commercial paper       These securities are backed by a pool of mortgage loans purchased from lenders, such as savings banks. a.mortgage pass-through security b.mortgage bond c.commercial paper d.corporate.
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    MULTIPLE CHOICE   The financial manager for a typical corporation is responsible for ________. a.designing the accounting system b.gathering, recording, and reporting financial information c.determining the most appropriate sources and uses of funds   d.preparing operating budgets for various departments       The senior financial manager has the title of ________. a.chief financial officer b.chief operations officer c.Treasurer d.Controller       Which of the following individuals has.
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    ESSAY   Explain each role in the hierarchy of financial management at a large firm.       Explain what can be indicated by the growing importance of financial professionals.     Explain the concept of risk-return trade-off.         What is the purpose of a financial plan?         Explain how the cash inflows and outflows of a business are similar to those of.
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    If Topeka Enterprises has a debt ratio of 40 percent, it means that for every $1 in ________, the firm has 40 cents in ________. a.owners’ equity; liabilities b.assets; liabilities c.owners’ equity; assets d.assets; owners’ equity       Daniel wishes to create a financial blueprint for a future period that reflects such items as expected sales revenues,.
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    What feature gives the bondholder or preferred stockholder the right to exchange the bond or preferred stock for a fixed number of shares of common stock? a.bond rating b.convertible securities c.pass-through securities d.standard stock       Securities are issued and traded in the____. a.government market b.securities market c.financial market d.super market       When a company needs capital to purchase inventory, expand a plant,.
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  3.Describe the potential problems in buying a business. 1.If you were in Deanna’s position, what would you do? 2.Identify options that Deanna’s mother and stepfather could consider rather than dividing business ownership equally among the children. 3.How could this business serve to provide entrepreneurial opportunities for Deanna? 1.What mistakes did Beatrice Foods make after.
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    Who appoints the members of the Public Company Accounting Oversight Board? a.FASB b.American Association of CPAs c.Federal Trade Commission d.Securities and Exchange Commission       The procedure used by accountants to convert transactions into financial statements is called ________. a.recording financial information b.processing financial information c.the accounting cycle d.summarizing financial information       The ________ was created by the Sarbanes-Oxley Act of 2002. a.Securities &.
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    If the Fed reduced reserve requirements, ________. a.banks would have less money to lend businesses and consumers b.economic growth would decline c.inflation would decline d.banks would have more money to lend out       Which of the following actions would have the effect of increasing the supply of money and credit and lowering interest rates? a.The Fed buys.
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      A company’s financial plan should answer all of the following questions EXCEPT ________. a.What is the contingency plan in case of bankruptcy? b.What funds will the firm require during the appropriate period of operations? c.How will it obtain the necessary money? d.When will it need more cash?       Major current assets include all of the following.
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  ESSAY   Describe how the financial system operates.       Describe the two ways that funds can be transferred between savers and users.     Differentiate among the different types of money market instruments.       Explain the main features of preferred stock.         .
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  MATCHING   Complete the following using the terms listed.   a.bonds b.commercial banks c.Nasdaq d.credit unions e.financial system f.call provision g.insider trading h.FOMC i.securities j.New York Stock Exchange k.online banking l.limit order m.debentures n.primary market o.net savers       The _____ is sometimes referred to as the Big Board, the most famous and one of the oldest stock markets in the world, having been founded in 1792.   As a whole, ________ save.
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    Makayla is a corporate CPA working on a new budget. When she lists the company’s liabilities, which of the following will she include? a.Computer software b.Owners’ equity c.Marketable securities d.Employees’ wages and salaries         Jackson, chief financial officer for a company, is interested in a summary of all the costs related to producing revenues for the.
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    Underwriting is the process used by insurance companies to determine whom to insure and what to charge.       It is estimated that only 20 percent of all 401(k) assets are invested in mutual fund shares.     By some estimates, more than 25 percent of all common stocks are owned by pension funds.       One of the.
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  5.Based upon Michael Porter’s Five Forces model, describe the EET’s industry. 6.Is the EET a business model that is conducive to franchising?  Why or why not? 7.EET is a family business.  How do Michael and Sheena address the issues of balancing the demands of the business with the family?   .
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    Alex buys a money market instrument. It will mature within, at most, ____. a.10 years b.2 years c.1 year d.6 months       ___ are short-term securities issued by the U.S. Treasury and backed by the full faith and credit of the U.S. government. a.Treasury bills b.CDs c.Commercial paper d.Bonds       Treasury bills have a minimum denomination of ____. a.$100,000 b.$10,000 c.$1,000 d.$100       _____ is a form of.
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    The most common type of order is called a ___. It instructs the broker to obtain the best possible price—the highest price when selling and the lowest price when buying. a.fast order b.stock order c.market order d.limit order       Which of the following statements is incorrect? a.The number of commercial banks is declining each year. b.Commercial banks are.
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      Virtually all developed countries and many developing countries have stock exchanges.     The Nasdaq is a computerized communications network that links member investment firms and is the world’s largest intranet.     Nondepository institutions include life insurance companies, such as Northwestern Mutual; pension funds, such as the Florida state employee pension fund; and mutual funds.     The.
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    MULTIPLE CHOICE   In the U.S. financial system, which of the following is a net saver? a.households b.business c.the government d.financial institutions       Zachary buys a bond issued by the city of Atlanta. This is an example of funds being transferred from a saver to a user ________. a.through a financial institution b.through the financial markets c.Directly d.through the government       One of the.
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    All market participants must keep detailed records of every aspect of every trade. What is this called? a.paper trail b.audit trail c.trade record d.prospectus       Out of the 20 largest banks in the world, ________ are U.S. banks. a.Half b.5 c.only 2 d.None       If the Fed pushes interest rates lower, policymakers at other nations’ central banks will most likely ____. a.follow suit,.
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    Financial plans that focus on projections no more than a year or two in the future are known as strategic plans.     Chemical manufacturer DuPont has approximately $0.68 in assets for every dollar in sales. According to asset intensity, for every $100 increase in sales, the firm would need about $100 of.
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    Which of the following current assets is NOT included when calculating the acid-test ratio? a.Inventory b.Marketable securities c.Cash d.Accounts receivable       Kwane wants to assess his firm’s ability to meet its short-term obligations. Which of the following ratios are the most relevant? a.Activity ratios b.Debt ratios c.Liquidity ratios d.Profitability ratios       If a firm has a current ratio of 2.5, it means.
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    Camille is an accountant who works for a firm providing auditing services to other businesses. Camille is a public accountant.     Investing activities focus on selling goods and services, but they also consider cost control as an important element of sound financial management.     A public accounting firm is prohibited from providing both consulting.
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  2.What opportunity did the franchisees see in buying back Krispy Kreme rather than starting a new company from scratch? 3.Describe several business lessons that can be drawn from Krispy Kreme’s history. 4.Krispy Kreme started as a family business.  How has that influenced the operation of the company? 5.Identify three questions you would have.
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    The FBI is an example of a governmental agency that hires accountants.     Assets can include intangible possessions such as patents and trademarks.     The GAAP standard of relevance ensures that one firm’s financial statements can be compared with those of similar businesses.     The SEC is the chief federal regulator of financial markets and the.
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    Two commonly used liquidity ratios are the inventory turnover ratio and the leverage ratio.     A firm has $12 million in current assets, of which $8 million is inventory. If the company has $4 million in current liabilities, then its current ratio equals 1.0.     Return on equity is a profitability ratio.     Profitability ratios measure.
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    TRUE/FALSE   Accounting is the language of business.     Accounting information can be as important to those outside the organization as it is to those inside the organization.     Daily business decisions are generally unaffected by accounting information; long-term decisions, however, are affected by accounting information and the interpretation of financial reports.     Most companies refuse to share.
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  4.Is there a future for Craigslist? What might that future look like? 1.Prior to starting the EET, what types of things did Michael and Sheena do to help themselves build entrepreneurial knowledge/skills? 2.What motivated Michael and Sheena to start the EET? 3.How did Michael and Sheena determine that the EET was a sound.
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    When a firm receives goods or services from a supplier and agrees to pay for them at a later date, this arrangement is called ________. a.a short-term loan b.a repurchase agreement c.trade credit d.commercial credit       Short-term assets are expected to be converted into cash within _____. a.a month b.a year c.a week d.six months       Which of the following assets would.
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    Explain the difference between an expansion decision and a replacement decision.     Explain why companies frequently choose to use debt.       Explain the concept of leverage.         Describe a disadvantage of equity capital.     List the major sources of short-term and long-term funds.         .
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    Commercial paper is securities sold by corporations, such as General Electric, that mature from 1 to 270 months from the date of issue.       Bonds are issued in various denominations—face values—usually between $100 and $2,500.     CDs with denominations of $1,000,000 or less per depositor are federally insured.       Bondholders are creditors, therefore they have a.
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1.What are four positive aspects of franchising for a business startup?  Why are they important? 2.What are some challenges faced by franchisees? 3.Describe the type of franchise that you might want to open. 4.Franchisees agree to pay a variety of fees to franchisors initially and in an ongoing manner.  Describe these fees and.
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    Owners of common stock expect returns on their investment in the form of cash dividend payments, expected price appreciation, or both.       The market value of a stock is the price at which the stock is currently selling.     Preferred stockholders receive fixed dividends.       In the long run stock prices tend to follow a company’s.
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  1.Compare and contrast product and trade-name franchising and business-format franchising. 2.Explain why the Franchise Disclosure Document is critical to analyzing a franchise opportunity. 3.What, if any, trends in franchising suggest continued expansion of the industry?  Contradiction? 1.Visit the Wahoo Fish Taco Web site at http://www.wahoos.com .  What are the advantages of a Wahoo.
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