Saudi Electronic University

HCM 213

Chapter 8

Multiple Choice

1)A fund in which monies are set aside each year to ensure that a bond can be liquidated at maturity is a?

1. 1. Sinking fund
   2. Swimming fund
   3. Bond fund
   4. Term fund
2. Hedging is the art of off-setting high variable rate                             payments with returns from variable rate                                                   .
   1. Investments, debts
   2. Bonds, investments
   3. Debt, investments
   4. Stock, debts
3. An asset with clear value that is pledged against a loan to reduce risk to the lender is:
   1. Colloidal
   2. Bonds
   3. Collateral
   4. Trustee
4. A debenture is:
   1. A secured bond
   2. An unsecured bond
   3. Subject to harsh regulations
   4. Non existent
5. A secondary market deals with buying and selling bonds that have already been                                              .
   1. Called
   2. Forfeit
   3. Issued
   4. Exempted

6. Tax-exempt bonds can be used by:
   1. Any organization
   2. Tax-exempt organizations
   3. Tax paying organizations
   4. No organization
7. According to Fitch and S&P’s bond ratings, which rating is highest?
   1. AAAA
   2. Aa
   3. AAA
   4. BBB
8. The highest bond rating a health care provider can usually achieve is:
   1. AA or Aa
   2. BBB or Baa
   3. Aaa or AAA
   4. Ba or BB
9. In a capital lease the lessor aims to lease the asset for                               of its economic life.
   1. None
   2. Virtually all
   3. Virtually half
   4. An insignificant amount
10. An organization should borrow                             -term funds for                                -term needs.
    1. Long, short
    2. Short, long
    3. Short, short
    4. None of the above

True or False

1. Bonds can only be issued with a fixed rate. True or False?

2. There are two types of leases: operating and capital. True or False?