Chapter 16 Financial Management and Securities Markets Quiz 1

Chapter 16 Financial Management and Securities Markets Quiz

1. A marketable security is a temporary investment of cash. 
Select one: True ../ False 
The correct answer is 'True'. 
2. Commercial paper is issued by large companies and backed by collateral. 
Select one: True False V 
The correct answer is 'False'. 
3. Eurodollar deposits can only be made at banks located in London. 
Select one: True False V 
The correct answer is 'False'. 
4. The principal is the amount of money a business pays to use a bank's funds. 
Select one: True False NI 
The correct answer is 'False'. 
5. Lenders first evaluate a borrower's history of borrowing and repaying loans by looking at the borrower's past credit history. 
Select one: True ../ False 
The correct answer is 'True'. 
6. Capital budgeting is the process of analyzing business needs and the selection of assets that will maximize the value of the business. 
Select one: True V False 
The correct answer is 'True'. 
Select one: True ../ False 
The correct answer is 'True'. 
8. The par value is the interest rate on a bond. 
Select one: True False V 
The correct answer is 'False'. 
9. Two common means of financing with long-term liabilities are: equity financing and debt financing. 
Select one: True ../ False 
The correct answer is 'True'. 
10. Securities markets provide liquidity. 
Select one: True V False 
The correct answer is 'True'.