Kiran needs additional short-term financing for his robotics company,

so he asks his suppliers if they could issue a discount if he pays his bills early.


What type of financing resource is Kiran using?

-a) Factoring
-b) Trade credit
-c) Peer-to-peer lending
-d) Barter

What does the residual dividend model mean for investors?

-a) They should expect dividend distributions that are equal to net income.
-b) They should expect to consistently receive the same dividend.
-c) They should expect a level of uncertainty regarding their dividends.
-d) They should expect to always receive very small dividends.

Which of the following is a goal of working capital management?

-a) To minimize free working capital and maximize opportunity costs
-b) To ensure liquidity and increase cash holding costs
-c) To lengthen the span of time between payment of accounts payable and collection of accounts receivable
-d) To balance adequate cash flow against maximal returns

Which of the following investors would likely prefer a cash dividend over a stock dividend?

-a) Kylie is a high-income earner and prefers to avoid additional taxes this year.
-b) Enrique subscribes to the "bird in the hand" theory when it comes to dividends.
-c) Layton prefers when companies let him decide how to benefit from his dividends.
-d) Harriett is more focused on long-term outcomes than short-term ones when it comes to investing.

What is one advantage of NPV as a capital budget method?

-a) It is flexible, in the sense that the discount rate can be adjusted to account for factors like risk.
-b) Cash flows and the discount rate are easy to accurately determine.
-c) It is equally accurate whether cash flows are known or estimated.
-d) It accounts fully for opportunity costs.

Which of the following types of financing is typical for a business in its mature stage?

-a) Start-up venture capital
-b) Second-round venture capital
-c) Bank loans
-d) Equity