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Finance Flashcards

Finance Final

The difference between amount of cash on the firm’s books and the amount credited to its bank float
which security trades on a discount basis? treasury bill
a firm that wishes to minimize risk when investing idle cash would be least likely to buy long term corporate bonds
the three primary policy variable to consider when extending credit are? credit standards, the terms of trade, and collection policy
what are eurodollars? US dollars held on deposit by foreign banks
what is not a valid reason for holding cash? to earn highest return possible
what is not a method of speeding up collections of cash? extended disbursement float
which of the following securities represents an unsecured promissory note issued by a corporation? commercial paper
what is the practice of maintaining a minimum checking account balance? compensating balance
what is the most important factor of determining the cost of bank financing? the effective rate
large firms tend to be? net suppliers of trade credit
in the general sense, the value of any asset is the? present value of the cash flows expected to be received
what are the components included in the required rate of return on a bond? risk premium, real rate of return, and inflation premium
if the inflation premium for a bond goes up, the sales price of the bond will? go down
what is a characteristic of the price of preferred stock? preferred stock is valued as a perpetuity

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