Ch.7 Quiz

Instructions
Read the questions carefully.

This assessment is worth 100 points.

  1. Cash management becomes more important as the level of short-term interest rates rise.   (5 points)

      
      

  2. "Float" is the name given for a short-term loan between suppliers and buyers.   (5 points)

      
      

  3. A lock-box is used by the selling corporation to speed up the check collection and check-clearing process.   (5 points)

      
      

  4. Stretching out the maturity of marketable securities can rarely result in a loss.   (5 points)

      
      

  5. The "SWIFT" transfer system was developed to aid regional bank fund transfers within the United States.   (5 points)

      
      

  6. The two basic costs associated with inventory are production cost and carrying cost.   (5 points)

      
      

  7. Treasury bills are unique in that they trade on a premium basis.   (5 points)

      
      

  8. Because they generally run a surplus budget, government agencies are able to issue securities with slightly lower yields than direct Treasury issues.   (5 points)

      
      

  9. The use of automated clearinghouses (ACHs) saves money for consumers, corporations and financial institutions by reducing transactions costs.   (5 points)

      
      

  10. One way businesses try to overcome the risk associated with new customers is to access a credit scoring report that will predict the probability of a customer causing credit problems in the future.   (5 points)

      
      

  11. Deposited checks may be cleared through   (5 points)

    a.  
    b.  
    c.  
    d.  

  12. A firm that wishes to minimize risk when investing idle cash would be least likely to buy   (5 points)

    a.  
    b.  
    c.  
    d.  

  13. Characteristics of a money market mutual fund include   (5 points)

    a.  
    b.  
    c.  
    d.  

  14. Waldron Inc. is considering selling to a group of new customers that will bring in sales of $15,000 with a return on sales of 5%. The only new investment will be in accounts receivable. Waldron has a turnover ratio of 5 to 1 between sales and accounts receivable. What is the return on investment?   (5 points)

    a.  
    b.  
    c.  
    d.  

  15. Assuming that we can earn a 13.5% return on accounts receivable, which of the following actions to finance an increase in our accounts receivable balance would be optimal?   (5 points)

    a.  
    b.  
    c.  
    d.  

  16. Inventory is usually divided into three basic categories except   (5 points)

    a.  
    b.  
    c.  
    d.  

  17. The amount of safety stock that a firm carries depends upon   (5 points)

    a.  
    b.  
    c.  
    d.  

  18. Which of the following is not a true statement about automated clearinghouses (ACHs)?   (5 points)

    a.  
    b.  
    c.  
    d.  

  19. International cash management systems are more complex than domestic cash management systems because of   (5 points)

    a.  
    b.  
    c.  
    d.  

  20. Companies that are mostly influenced by seasonal sales have to make a choice between   (5 points)

    a.  
    b.  
    c.  
    d.  



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