Business Finance - Practice Test

[#271] Which of the following is not one of the steps for currency exposure management?

(A) Forecast the degree of exposure

(B) Develop a reporting system to monitor exposure and exchange rate movements

(C) Buying additional foreign subsidiaries

(D) Assign responsibility for hedging exposure

Correct Answer

(C) Buying additional foreign subsidiaries

[#272] Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current assets needs?

(A) Trade credit

(B) Six months bank notes

(C) Account payable

(D) Common stock equity

Correct Answer

(B) Six months bank notes

[#273] Financial signaling has been raised as an argument in the battle over the relevancy of dividends. Which of the following statements indicate financial signaling argument?

(A) The decrease of dividends should be viewed by investors as positive news, as it indicates the company has better opportunities for the earnings

(B) The reported accounting earnings of a company, not dividends, are a proper reflection of the economic earnings

(C) The price of a firm's stock may react unfavourably to an increase in dividends

(D) The cash dividends speak louder than words to convey more information management's expectations of the future

Correct Answer

(D) The cash dividends speak louder than words to convey more information management's expectations of the future

[#274] Preference shares

(A) Have specific maturity dates

(B) Offer investors the same level of risk of ordinary shares

(C) Have voting rights

(D) Pay a specific return to investors

Correct Answer

(D) Pay a specific return to investors

[#275] When an enterprise has an unhedged receivableor payable denominated in a foreign currency, and the settlement of the obligation has not yet taken place, that firm is said to have

(A) Transaction exposure

(B) Infinite exposure

(C) Tax exposure

(D) Operating exposure

Correct Answer

(C) Tax exposure

Business Finance - Study Mode

[#271] Which of the following is not one of the steps for currency exposure management?

Correct Answer

[#272] Which of the following is the most appropriate non-spontaneous form for financing the excess seasonal current assets needs?

Correct Answer

[#273] Financial signaling has been raised as an argument in the battle over the relevancy of dividends. Which of the following statements indicate financial signaling argument?

Correct Answer

[#274] Preference shares

Correct Answer

[#275] When an enterprise has an unhedged receivableor payable denominated in a foreign currency, and the settlement of the obligation has not yet taken place, that firm is said to have

Correct Answer