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Georgia Southern University - BUSA 1105 LM7 Quiz Answers 1)Tara works as a programmer for XYZ Electronics Company

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Georgia Southern University - BUSA 1105

LM7 Quiz Answers

1)Tara works as a programmer for XYZ Electronics Company. About one month ago, Tara bought 500 shares of a small start-up firm with great technology because she heard rumors from the CFO’s secretary that XYZ was planning to purchase the smaller company and give it an infusion of cash. Yesterday, XYZ announced the decision to buy the small firm, which significantly increased the small company’s stock price. Tara most likely performed her trade based upon ________.

2.         The ________ is the federal regulating body for the securities markets.

3.         Adam Culbreath wanted to invest in the stock market, but didn’t have the entire $10,000 he needed to buy the shares of the company he wanted. Adam does have $7,000, so he decided to borrow the remainder of the stock’s purchase price from his broker in order to be able to buy the stock he wanted. Adam:

4.         Maria Chadwick is interested in investing in the stock of a corporation that pays regular dividends and generates consistent growth in the price of a share. Maria is interested in purchasing:

5.         The Credit Card Responsibility Accountability and Disclosure Act of 2009 did very little to protect ________ from increases in credit-card interest rates and fees.

6.         Issuing stock as a source of funding is referred to as ________.

7.         Backstreet Books, Inc., an eclectic book and music store near a large college campus, is a reseller. The operation buys books almost every day. Deliveries are constantly part of the day-to-day operation of the firm. The transportation company that delivers to Backstreet Books provides this service on trade credit terms of 3/5, net 30. This means the firm ________.

8.         The financial manager for Bellandro Bay Brewery is working with the firm’s marketing department to bring out a new line of pumpkin ale. The new product development and subsequent production will require a long-term investment of funds by the company. Which of the following sources of financing would be representative of such a long-term funding requirement?

9.         If the paper reports a particular corporate bond price as 79.5, the price an investor would have to pay is ________.

10.       Idle Time Gaming, Inc., knows that its stockholders expect a return on their investment. The expected return that stockholders anticipate translates into the company’s ________. Essentially, this is the amount that the investment funds are costing the firm.

11.       Alma is interested in receiving income to help save money for her grandson’s college education. She is considering investing in the stock of a fast-growing technology company that is promising a rather high dividend rate to shareholders. One thing it will be helpful for Alma to remember is:

12.       Financial managers examine the financial data prepared by ________ and make recommendations to top executives about strategies for improving the financial strength of a firm

13.       The best type of bond for an investor to buy who wants extremely low risk is a:

14.       A bond that sells for less than its face value is called a:

15.       Marco’s Italian Gardens, an authentic Italian restaurant in suburban Chicago, worked with a local bank for a ________. This unsecured source of funds was available for Marco to tap into if he needed immediate funds for the business. He liked the fact that he had a cushion and only used it if he fell short of funds.

16.       Commercial finance companies accept more risk than banks, and the interest rates they charge are usually ________ than commercial banks.

17.       Which of the following is a long-term obligation of a corporation or government?

18.       ________ and their members provide value because they buy and sell securities on behalf of the companies and individuals they represent.

19.       Which of the following is a major reason why businesses fail financially?

20.       One of the consequences of the recent financial crisis was ________.