Your Results for: "Multiple choice questions" Print this page

Site T itle: Fundamentals of Financial Management, thirteenth Summary of Result s

edition
Book T itle: Fundamentals of Financial Management, thirteenth 29% Correct of 24 Scored items:
7 Correct: 29%
edition
17 Incorrect: 71%
Book Author: Van Horne/Wachowicz
More information about scoring
Location on Site: Student Resources > Chapter 9 > Multiple choice
questions
Date/T ime Submitted: July 20, 2020 at 12:24 PM (UT C/GMT )

1. Which of the following is least likely to be considered a short-term marketable security?

Your Answer: An original issue 30-year government bond with one-year remaining until final maturity.
Correct Answer: An original issue 30-year corporate bond with one-year remaining until final maturity.

  Government securities with one-year or less maturity are also considered a money market instrument.

2. T he optimal balance of marketable securities held to take care of probable deficiencies in the firm's cash
account is referred to as the __________ segment in the firm's portfolio of short-term marketable securities.

Your Answer: controllable cash

Correct Answer: ready cash

  T his segment consists of the marketable securities held for meeting controllable outflows such as taxes
or dividends.

3. T he marketable securities available for unassigned purposes at the current time is referred to as the
__________ segment in the firm's portfolio of short-term marketable securities.

Your Answer: controllable cash

Correct Answer: free cash

  T his segment consists of the marketable securities held for meeting controllable outflows such as taxes
or dividends.

4. Which of the following is not a standard method of transferring funds when using concentration banking?

Your Answer: Automated clearinghouse electronic transfer.

Correct Answer: Payable through draft (PT D).

  T he DT C is a method of transferring funds, but so are all of the other listed methods.

5. Which would be an inappropriate investment for temporarily idle corporate cash that will be used to pay
quarterly dividends three months from now?
 Your Answer: An originally issued 30-year T reasury bond with a current annual yield of 9.7 percent that
matures in 2 years.

6. Which of the following marketable securities is issued by the U.S. federal government?

Your Answer: Negotiable certificates of deposit.

Correct Answer: T-bills.

  Negotiable CDs are issued by banks.

7. Which of the following was not suggested by John Maynard Keynes as a reason for holding cash?

Your Answer: Investment motive.

8. Which of the following statements most accurately describes the modern approach to cash management?

Your Answer: Cash management involves the efficient processing, collection, and depositing of cash.
Correct Answer: Cash management involves the efficient processing, collection, and depositing of cash.

  Cash management involves the efficient collection, disbursement, and temporary investment of cash.

9. Collection float is the __________.

Your Answer: time consumed in clearing the check through the banking system
Correct Answer: total time between the mailing of the check by the customer and the availability of cash
to the receiving firm

  T his is availability float. Collection float is the total time between the mailing of the check by the customer
and the availability of cash to the receiving firm.

10. Deposit float is the __________.

Your Answer: time the check is in the mail

Correct Answer: time during which the check received by the firm remains uncollected

  T his is mail float. Deposit float is the time during which the check received by the firm remains uncollected.

11. Availability float is the __________.

Your Answer: time the check is in the mail

Correct Answer: time consumed in clearing the check through the banking system
  T his is mail float. Availability float is the time consumed in clearing the check through the banking system.

12. Which of the following is not a technique to speed up collections?

Your Answer: Replace a lockbox system with the direct mailing of payments to the firm.

13. Concentration banking occurs when the firm __________.

Your Answer: replaces their lockbox system with a system that involves the direct payment to the firm
Correct Answer: moves cash from regional lockboxes to a centralized cash pool at a single institution

  Concentration banking occurs when the firm moves cash from regional lockboxes to a centralized cash
account.

14. T he marketable securities held for meeting controllable outflows such as taxes or dividends is referred to
as the __________ segment in the firm's portfolio of short-term marketable securities.

Your Answer: controllable cash

15. Eurodollars are best described as __________.

Your Answer: a U.S. dollar-denominated deposit -- generally in a bank located outside the United States --
that is not subject to U.S. banking regulations

16. Which of the following statements concerning remote disbursement and controlled disbursement is
correct?

Your Answer: Both remote and controlled disbursement are generally perceived as unethical practices
and, therefore, their use is in decline.
Correct Answer: Remote disbursement is often viewed as an unethical disbursement procedure, whereas
controlled disbursement is not viewed in such a negative light.

  Remote disbursement is often viewed as an unethical practice, but controlled disbursement is not viewed
that way. Remote disbursement is in decline, while controlled disbursement is a common practice.

17. T he field of Electronic Commerce (EC) is awash with acronyms (i.e., a word formed from the initial letter or
letters of a series of successive words). Which of the following acronyms does not belong with the other
Electronic Commerce-related acronyms?

Your Answer: CHIPS

Correct Answer: SPECT RE

  Clearing House Interbank Payments System (CHIPS) is an automated system used primarily for
 international payments.

18. Which of the following statements is most correct regarding outsourcing?

Your Answer: While outsourcing is widely applied in the area of "collections," it is much less applicable
to the area of "disbursements."
Correct Answer: Essential, but noncore areas of business are candidates for outsourcing.

  Outsourcing is widely applied in the area of "collections" (e.g., a lockbox system); however, it is also
especially well suited for the area of "disbursements."

19. A check-like instrument that is drawn against the payor and not against a bank, as is a check, is referred to
as a __________.

Your Answer: wire transfer

Correct Answer: payable through draft

  A wire transfer is the electronic funds transfer using a two-way communications system rather than a
payable through draft as described in this question.

20. T he electronic funds transfer using a two-way communications system is referred to as a __________.

Your Answer: wire transfer

21. T he minimum denomination for a U.S. T reasury bill is __________.

Your Answer: $1,000

Correct Answer: $100

  A U.S. T reasury bill has a minimum denomination of $1,000.

22. T he minimum denomination for a negotiable certificate of deposit at most money-center banks is
__________.

Your Answer: $5,000

Correct Answer: $100,000

  A negotiable certificate of deposit has a minimum denomination of $100,000.

23. A collection service provided by the firm's financial institution that receives electronic payments and
accompanying remittance data and communicates this to the company in a specific format is referred to
as what?
 Your Answer: Email.
Correct Answer: Electronic lockbox.

  T he electronic lockbox performs this task and is replacing traditional lockbox systems in some situations.

24. A $1,000, 13-week (91 days) United States T reasury bill can be purchased for $981. Calculate the bond
equivalent yield (BEY).

Your Answer: 7.77%

  Correct

E-mail Your Result s

My name is (first last):

E-mail my results to:

E-mail address: Send as:

Me Text

Instructor Text

TA Text

O ther Text

Help E-mail Results

Copyright © 1995 - 2011 Pearson Education . All rights reserved.

Legal Notice | Privacy Policy | Permissions