Financial Management Questions and Answers

Financial Management in MBA Programs: An In-Depth Analysis
Financial management is a cornerstone of business education, particularly within Master of Business Administration (MBA) programs. As MBA students delve into this subject, they encounter a wide range of concepts and tools essential for making sound financial decisions in a variety of business contexts. This article provides an in-depth exploration of financial management within MBA curricula, covering key concepts, analytical tools, and practical applications.

1. Introduction to Financial Management
Financial management is the process of planning, organizing, controlling, and monitoring financial resources to achieve organizational goals. It encompasses a range of activities from budgeting and forecasting to investment analysis and risk management. For MBA students, mastering financial management involves understanding both theoretical concepts and practical applications.

In an MBA program, financial management is often integrated with other business disciplines such as marketing, operations, and strategic management. This holistic approach ensures that future business leaders are well-equipped to make informed decisions that align with overall business strategy.

2. Core Concepts in Financial Management
2.1 Financial Statements and Analysis
A fundamental aspect of financial management is the ability to analyze and interpret financial statements. MBA students are trained to scrutinize the balance sheet, income statement, and cash flow statement to assess a company’s financial health.

Balance Sheet: Provides a snapshot of a company's assets, liabilities, and equity at a given point in time.
Income Statement: Shows the company’s revenue, expenses, and profit over a specific period.
Cash Flow Statement: Details the cash inflows and outflows from operating, investing, and financing activities.
Understanding these statements enables MBA students to conduct financial ratio analysis, such as profitability ratios, liquidity ratios, and solvency ratios, which are crucial for evaluating business performance.

2.2 Time Value of Money
The time value of money (TVM) is a core principle in financial management. It asserts that a dollar today is worth more than a dollar in the future due to its potential earning capacity. MBA programs emphasize the importance of discounting and compounding techniques to evaluate investment opportunities and financial decisions.

Present Value (PV): Calculates the current value of a future amount of money based on a specified rate of return.
Future Value (FV): Determines the value of a current amount of money at a future date, considering a specified rate of return.
Net Present Value (NPV): Evaluates the profitability of an investment by comparing the present value of cash inflows with the initial investment.
Internal Rate of Return (IRR): Measures the percentage rate earned on each dollar invested for each period it is invested.
2.3 Risk and Return
The relationship be

1. FinancialManagementinMBAPrograms:AnIn-DepthAnalysis
Financialmanagementisacornerstoneofbusinesseducation,particularlywithinMasterof
BusinessAdministration(MBA)programs.AsMBAstudentsdelveintothissubject,they
encounterawiderangeofconceptsandtoolsessentialformakingsoundfinancialdecisions
inavarietyofbusinesscontexts.Thisarticleprovidesanin-depthexplorationoffinancial
managementwithinMBAcurricula,coveringkeyconcepts,analyticaltools,andpractical
applications.
1.IntroductiontoFinancialManagement
Financialmanagementistheprocessofplanning,organizing,controlling,andmonitoring
financialresourcestoachieveorganizationalgoals.Itencompassesarangeofactivities
frombudgetingandforecastingtoinvestmentanalysisandriskmanagement.ForMBA
students,masteringfinancialmanagementinvolvesunderstandingboththeoreticalconcepts
andpracticalapplications.
InanMBAprogram,financialmanagementisoftenintegratedwithotherbusinessdisciplines
suchasmarketing,operations,andstrategicmanagement.Thisholisticapproachensures
thatfuturebusinessleadersarewell-equippedtomakeinformeddecisionsthatalignwith
overallbusinessstrategy.
2.CoreConceptsinFinancialManagement
2.1FinancialStatementsandAnalysis
Afundamentalaspectoffinancialmanagementistheabilitytoanalyzeandinterpretfinancial
statements.MBAstudentsaretrainedtoscrutinizethebalancesheet,incomestatement,
andcashflowstatementtoassessacompany’sfinancialhealth.
●BalanceSheet:Providesasnapshotofacompany'sassets,liabilities,andequityat
agivenpointintime.
●IncomeStatement:Showsthecompany’srevenue,expenses,andprofitovera
specificperiod.
●CashFlowStatement:Detailsthecashinflowsandoutflowsfromoperating,
investing,andfinancingactivities.
UnderstandingthesestatementsenablesMBAstudentstoconductfinancialratioanalysis,
suchasprofitabilityratios,liquidityratios,andsolvencyratios,whicharecrucialfor
evaluatingbusinessperformance.
2.2TimeValueofMoney
Thetimevalueofmoney(TVM)isacoreprincipleinfinancialmanagement.Itassertsthata
dollartodayisworthmorethanadollarinthefutureduetoitspotentialearningcapacity.

2. MBAprogramsemphasizetheimportanceofdiscountingandcompoundingtechniquesto
evaluateinvestmentopportunitiesandfinancialdecisions.
●PresentValue(PV):Calculatesthecurrentvalueofafutureamountofmoneybased
onaspecifiedrateofreturn.
●FutureValue(FV):Determinesthevalueofacurrentamountofmoneyatafuture
date,consideringaspecifiedrateofreturn.
●NetPresentValue(NPV):Evaluatestheprofitabilityofaninvestmentbycomparing
thepresentvalueofcashinflowswiththeinitialinvestment.
●InternalRateofReturn(IRR):Measuresthepercentagerateearnedoneachdollar
investedforeachperioditisinvested.
2.3RiskandReturn
Therelationshipbetweenriskandreturnisacrucialconceptinfinancialmanagement.MBA
studentslearntoassesstheriskassociatedwithinvestmentsandtheexpectedreturns.The
CapitalAssetPricingModel(CAPM)isoftenusedtodeterminetheexpectedreturnonan
investmentbasedonitssystematicrisk.
●Risk:Referstotheuncertaintyassociatedwithaninvestment’sreturns.Itincludes
bothsystematicrisk(marketrisk)andunsystematicrisk(specifictotheinvestment).
●Return:Thegainorlossmadeonaninvestment,typicallyexpressedasa
percentageoftheinitialinvestment.
Understandingthisrelationshiphelpsinconstructinganinvestmentportfoliothatalignswith
aninvestor’srisktoleranceandfinancialgoals.
3.InvestmentAnalysisandManagement
3.1CapitalBudgeting
Capitalbudgetingistheprocessofevaluatingandselectinglong-terminvestmentsthatare
inlinewiththecompany’sstrategicobjectives.MBAstudentsaretrainedinvarious
techniquestoanalyzeinvestmentprojects:
●PaybackPeriod:Measuresthetimerequiredtorecouptheinitialinvestmentfrom
cashflows.
●DiscountedPaybackPeriod:Similartothepaybackperiodbutaccountsforthe
timevalueofmoney.
●NPV:Asdiscussedearlier,calculatesthevalueoffuturecashflowsminustheinitial
investment.
●IRR:DeterminesthediscountratethatmakestheNPVofallcashflowsequalto
zero.
Thesetoolshelpinmakinginformeddecisionsaboutwhichprojectstoundertake,
consideringfactorssuchasprofitability,risk,andalignmentwithstrategicgoals.
3.2PortfolioManagement

3. Portfoliomanagementinvolvesselectingandmanagingacollectionofinvestmentsto
achievespecificfinancialobjectives.MBAstudentslearnaboutvariousportfoliotheoriesand
models:
●ModernPortfolioTheory(MPT):Suggeststhatadiversifiedportfoliocanachieve
optimalrisk-returntrade-offs.
●EfficientFrontier:Representsthesetofoptimalportfoliosthatofferthehighest
expectedreturnforagivenlevelofrisk.
●AssetAllocation:Theprocessofdistributinginvestmentsacrossvariousasset
classes(stocks,bonds,realestate)tooptimizeriskandreturn.
Effectiveportfoliomanagementrequiresunderstandingmarketconditions,investment
products,andinvestorpreferences.
3.3FinancialInstruments
MBAprogramscoverabroadrangeoffinancialinstrumentsusedforinvestmentandrisk
management.Theseinclude:
●Equities:Sharesrepresentingownershipinacompany.
●Bonds:Debtinstrumentsissuedbycorporationsorgovernments.
●Derivatives:Financialcontractswhosevalueisderivedfromunderlyingassets(e.g.,
options,futures).
Understandingtheseinstrumentshelpsstudentsmakeinformeddecisionsaboutinvestment
strategiesandriskmanagement.
4.FinancialPlanningandControl
4.1BudgetingandForecasting
Budgetingandforecastingareintegralcomponentsoffinancialmanagement.MBAstudents
learntocreateandmanagebudgetstoallocateresourceseffectivelyandforecastfuture
financialperformance.
●OperatingBudget:Detailstheexpectedrevenueandexpensesforaspecificperiod.
●CapitalBudget:Focusesonlong-terminvestmentsandfinancing.
●CashFlowForecast:Estimatesfuturecashinflowsandoutflowstoensureliquidity.
Effectivebudgetingandforecastinghelpbusinessesplanforfuturefinancialneedsand
avoidpotentialshortfalls.
4.2FinancialControl
Financialcontrolinvolvesmonitoringandmanagingfinancialperformancetoensure
alignmentwithorganizationalgoals.Keyaspectsinclude:
●VarianceAnalysis:Comparesactualfinancialperformancewithbudgetedfiguresto
identifydiscrepancies.

4. ●FinancialReporting:Providesregularupdatesonfinancialperformanceto
stakeholders.
●InternalControls:Implementedtosafeguardassets,ensureaccuracyinfinancial
reporting,andcomplywithregulations.
Thesepracticeshelporganizationsmaintainfinancialhealthandachievetheirstrategic
objectives.
5.CorporateFinanceandStrategicFinancialManagement
5.1CapitalStructure
Capitalstructurereferstothemixofdebtandequityfinancingusedtofundacompany’s
operationsandgrowth.MBAstudentsexplorevariouscapitalstructuretheoriesandtheir
implicationsforfinancialmanagement:
●Modigliani-MillerTheorem:Suggeststhat,inaperfectmarket,thevalueofafirmis
unaffectedbyitscapitalstructure.
●Trade-OffTheory:Proposesthatfirmsbalancethebenefitsofdebt(taxshields)with
thecosts(bankruptcyrisk).
●PeckingOrderTheory:Suggeststhatfirmspreferinternalfinancingoverexternal
financinganddebtoverequity.
Understandingcapitalstructurehelpsinmakingdecisionsaboutfinancingstrategiesand
managingfinancialrisk.
5.2DividendPolicy
Dividendpolicydetermineshowacompanydistributesprofitstoshareholders.MBAstudents
studyvariousdividendpoliciesandtheirimpactonfinancialperformance:
●DividendIrrelevanceTheory:Arguesthatdividendpolicydoesnotaffectafirm’s
value.
●DividendSignalingTheory:Suggeststhatdividendchangessignalmanagement’s
viewoffutureearnings.
●ResidualDividendPolicy:Distributesdividendsfromremainingearningsafter
financingprofitableinvestmentopportunities.
Dividendpolicydecisionsimpactinvestorperceptionandthecompany’sfinancialstability.
5.3MergersandAcquisitions
Mergersandacquisitions(M&A)involvetheconsolidationofcompaniesthroughvarious
transactions.MBAstudentsanalyzeM&Astrategiesandtheirfinancialimplications:
●ValuationTechniques:Methodssuchasdiscountedcashflow(DCF)analysisand
comparablecompanyanalysis.
●DueDiligence:TheprocessofinvestigatingandevaluatingpotentialM&Atargets.

5. ●IntegrationStrategies:Approachestomergingoperations,cultures,andsystems
post-acquisition.
EffectiveM&Astrategiescancreatevaluethroughsynergies,costsavings,andmarket
expansion.
6.EthicalConsiderationsandRegulatoryEnvironment
6.1FinancialEthics
Ethicalconsiderationsarecrucialinfinancialmanagement.MBAstudentslearnaboutthe
importanceofmaintainingintegrityandtransparencyinfinancialreportingand
decision-making:
●EthicalStandards:Guidelinesforethicalbehaviorinfinancialpractices.
●FraudPrevention:Techniquestodetectandpreventfinancialfraud.
●CorporateGovernance:Thesystemofrulesandpracticesgoverningcorporate
conduct.
Adheringtoethicalstandardshelpsbuildtrustwithstakeholdersandensurescompliance
withlegalandregulatoryrequirements.
6.2RegulatoryEnvironment
Theregulatoryenvironmentimpactsfinancialmanagementpracticesandincludesvarious
lawsandregulations:
●Sarbanes-OxleyAct:Enforcesstrictregulationsonfinancialreportingandinternal
controls.
●InternationalFinancialReportingStandards(IFRS):Globalstandardsforfinancial
reporting.
●Dodd-FrankAct:Introducesreformsinfinancialregulationtopreventsystemicrisk.
UnderstandingregulatoryrequirementshelpsMBAstudentsnavigatethecomplex
landscapeoffinancialmanagementandensurecompliance.
7.PracticalApplicationsandCaseStudies
7.1Real-WorldCaseStudies
MBAprogramsoftenincorporatecasestudiestoprovidepracticalinsightsintofinancial
management.Casestudiesallowstudentstoanalyzereal-worldbusinessscenariosand
applytheoreticalconceptstosolvecomplexproblems:
●FinancialDistressCases:Analyzingcompaniesfacingfinancialdifficultiesand
developingturnaroundstrategies.

6. ●InvestmentDecisions:Evaluatingthefeasibilityandprofitabilityofpotential
investments.
●StrategicPlanning:Developingfinancialstrategiestoachievelong-termbusiness
goals.
Casestudiesenhancestudents’problem-solvingskillsandpreparethemforreal-world
financialchallenges.
7.2FinancialModelingandTechnology
Financialmodelinginvolvescreatingrepresentationsoffinancialscenariostoaidin
decision-making.MBAstudentsusevarioustoolsandtechniquestobuildfinancialmodels:
●ExcelModeling:Utilizingspreadsheetstocreatefinancialprojectionsandanalysis.
●FinancialSoftware:Leveragingspecializedsoftwareforadvancedfinancial
modelingandanalysis.
DochecktheimportantFinancialManagement
Questionsbelow-:
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Belowsectionconsistsofimportantmultiplechoicequestionsonfinancial
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1.Thefieldoffinanceiscloselyrelatedtothefieldsof:
a)statisticsandeconomics
b)statisticsandriskanalysis
c)economicsandaccounting
d)accountingandcomparativereturnanalysis
ViewAnswer

7. Answer:c
2.Whichofthefollowingproperlylistsbalancesheetitemsinorderofliquidity,from
mostliquidtoleastliquid?
a)Accountsreceivable,inventory,marketablesecurities,cash.
b)Cash,marketablesecurities,accountsreceivable,inventory.
c)Inventory,marketablesecurities,cash,accountsreceivable.
d)Cash,inventory,accountsreceivable,marketablesecurities.
ViewAnswer
Answer:b
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3.Amortizationisconsideredasourceoffundstothefirmbecause
a)itispurelyanaccountingentryanddoesn'tinvolveadirectdisbursementoffunds,
freeingupthesefundsforotherinvestments
b)itrepresentsareductioninassetholdings
c)itrepresentsanincreaseinanassetaccount
d)amortizationisnotasourceoffunds
ViewAnswer
Answer:a
4.Receivablesturnoveris:
a)aprofitabilityratio
b)adebtutilizationratio
c)anassetutilizationratio
d)aliquidityratio
ViewAnswer
Answer:c
5.Financialratiosareusedto:
a)weighandevaluatetheoperatingperformanceofthefirm
b)provideanabsolutebenchmarkofindustryperformance
c)determinewhichfirmwillprovidethehighestreturntoinvestors
d)Noneoftheabovearecorrect

8. ViewAnswer
Answer:a
6.Profitabilityratiosmeasure
a)thespeedatwhichthefirmisturningoveritsassets
b)theabilityofthefirmtoearnanadequatereturnonsales,totalassets,and
investedcapital
c)thefirm'sabilitytopayoffshorttermobligationsastheyaredue
d)thedebtpositionofthefirminlightofitsassetsandearningpower
ViewAnswer
Answer:b
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7.Theconstructionoftheproformaincomestatementisbasedon:
a)theprioryear'sincomestatement
b)salesprojectionsandtheproductionplan
c)thecashbudget
d)thecashbudgetandprioryear'sincomestatement
ViewAnswer
Answer:b
8.Theprimarypurposeofthecashbudgetis:
a)tobreaktheincomestatementdownintomonthlyperiods
b)todeterminemonthlycashreceipts
c)todeterminethecollectionpattern
d)toallowthefirmtoanticipatetheneedforoutsidefunding
ViewAnswer
Answer:d
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9.Operatingleveragemaybedefinedas:
a)thedegreetowhichdebtisusedinfinancingthefirm
b)thedifferencebetweenpriceandvariablecosts
c)theextenttowhichcapitalassetsandfixedcostsareutilized

9. d)thedifferencebetweenfixedcostsandthecontributionmargin
ViewAnswer
Answer:c
10.Financialleverage:
a)reflectsthefirm'scommitmenttofixed,financialassets
b)hasnoimpactontheearningofthefirm
c)reflectstheamountofdebtusedinthecapitalstructureofthefirm
d)primarilyaffectstheleftsideofthebalancesheet
ViewAnswer
Answer:c
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11.Mostretailstoresaremainlyconcernedwith:
a)theirbuyers'forecastsforthecomingseason
b)matchingsalesandinventorylevels
c)decreasinginventoryturnover
d)theirinvestmentincapitalassets
ViewAnswer
Answer:b
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12.Theliquiditypremiumtheorysuggeststhatlong-terminterestratesarehigher
thanshort-terminterestratesbecause:
a)investorsgenerallyprefertoinvestshortperiodsoftime.
b)governmentpolicymaintainsthisrelationship.
c)thereisgreaterriskinlong-termbonds.
d)exchangeratefluctuationsestablishthisrelationship.
ViewAnswer
Answer:c
13.Usingalockboxsystemtoimprovecollections:
a)ismoreexpensivethantheuseofcollectioncenters
b)utilizeslocalbankstoclearlocalpaymentsmadetothecollectioncenter
c)providesmorefloatthancollectioncenters

10. d)resultsinchecksbeingforwardtoaP.O.boxandclearingthroughlocalbanks
ViewAnswer
Answer:d
14.Allofthefollowingarefactorsinfluencingthechoiceofmarketablesecurities
except:
a)yield
b)maturity
c)marketability
d)maximuminvestmentallowed
ViewAnswer
Answer:d
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15.Inestablishingcreditstandards,thefirmmustconsiderthenatureofthecredit
riskbasedonallofthefollowing,except:
a)priorrecordofpayment
b)termsofcredit
c)financialstability
d)currentnetworth
ViewAnswer
Answer:b
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16.Acashdiscountmaybestbedefinedas:
a)areductioninpriceifpaymentismadewithinthespecifiedtimeperiod
b)adiscountofferedtocriticalsuppliers
c)adiscountappliedtovolumesales
d)adiscountortherepaymentofthefirm'sdebt
ViewAnswer
Answer:a
17.Theextenttowhichinventoryfinancingmaybeemployedisbasedonallofthe
following,except:
a)themarketabilityofthepledgedgoods

11. b)theirassociatedpricestabilityofthegoods
c)theperishabilityofthegoods
d)thecontrolofthegoodsbythemanufacturer
ViewAnswer
Answer:d
18.Ifinterestorcompoundingisdoneonotherthananannualbasis,adjustby
a)dividingthenumberofyearsbythenumberofcompoundingperiods
b)multiplyingthenumberofyearsbythenumberofcompoundingperiods
c)dividingtheinterestratebythenumberofcompoundingperiod
d)multiplyingtheyearsanddividingtheinterestratebythenumberofcompounding
periods
ViewAnswer
Answer:d
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19.Commercialpapermaybestbedefinedas:
a)ashorttermobligationofthegovernmentissuedtocommercialinvestors
b)shorttermunsecuredpromissorynotesissuedbycorporations
c)aninsignificantsourceoffundstolargecorporations
d)thedebtobligationsofcharteredbanks
ViewAnswer
Answer:b
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20.Annuitypaymentsaregenerallyassumedtooccur:
a)duringtheperiod
b)atthebeginningoftheperiod
c)attheendoftheperiod
d)itdoesn'tmatterwhentheyoccur
ViewAnswer
Answer:c
21.Thevaluationofafinancialassetisbasedondetermining:
a)thepresentvalueoffuturecashflows

12. b)thecurrentyieldtomaturityonlongtermcorporatebonds
c)thecapitalbudgetingprocess
d)whatthecorporationispayingtoattractpreferredshareholders
ViewAnswer
Answer:a
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22.Whenthecouponrateonabondisequaltotheyieldtomaturity,thepriceofthe
bondwillbe:
a)par
b)abovepar
c)belowpar
d)moreinformationisrequired
ViewAnswer
Answer:a
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23.Todeterminethepriceofpreferredstock:
a)dividetherateofreturnbythedividendamount
b)dividethedividendamountbytherateofreturn
c)dividethedividendamountbytherateofreturnminusthegrowthrate
d)dividethedividendamountbythegrowthrate
ViewAnswer
Answer:b
24.Oneassumptionunderlyingtheuseofthecostofcapitaltoanalyzecapital
projectsisthat:
a)currentcostswillremainthesame
b)capitalstructurewillvarywiththetypeoffinancing
c)differentriskprojectsarerequiredtodiversifythefirm
d)theanalyzedprojectsareofcomparablerisktoexistingprojects
ViewAnswer
Answer:d

13. 25.Thecostofretainedearningsisequalto:
a)thereturnonnewcommonstock
b)thereturnonpreferredstock
c)thereturnonexistingcommonstock
d)Itdoesnothaveacost.
ViewAnswer
Answer:c
26.Thecapitalbudgetingdecisioninvolvestheplanningofexpendituresforprojects
withalifeofatleast:
a)oneyear
b)fiveyears
c)tenyears
d)fifteenyears
ViewAnswer
Answer:a
27.Underthepaybackperiod:
a)wecomputethetimerequiredtorecouptheoriginalinvestment
b)thereisnoconsiderationofinflowsafterthecutoffperiod
c)thetimevalueofmoneyisignored
d)alloftheabovearecorrect
ViewAnswer
Answer:d
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28.Allofthefollowingaretrueofcapitalcostallowanceexcept:
a)itisanon-cashexpense
b)itisnottax-deductible
c)itprovidestaxshieldbenefits
d)itshouldnotbedisregardedincapitalbudgetingdecisions
ViewAnswer
Answer:b
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14. 29.Thestandarddeviation:
a)isthesquarerootofthevariance
b)measuresdispersionorvariabilityaroundtheexpectedvalue
c)maybeusedtocompareinvestmentswiththesameexpectedreturn
d)alloftheabovearecorrect
ViewAnswer
Answer:d
30.Theefficientfrontierrepresents:
a)thedifferencebetweeninvestmentreturns
b)optimalrisk-returntradeoffs
c)thecorrectinvestmentforallfirmstomake
d)thecorrelationbetweenprofitsandtheportfolioeffect
ViewAnswer
Answer:b
31.Whichofthefollowingconstitutesaninternalsourceoffunds:
a)corporatebonds
b)commonstock
c)commercialpaper
d)retainedearningsandamortizationcashflow
ViewAnswer
Answer:d
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32.Itwouldbefairtosaythatsecuritiesmarketsinthefuture:
a)willbecomemorecompetitiveasaninternationalmarketsystemdevelops
b)willbelessefficient
c)willbemorehighlysegregatedthantheyaretoday
d)willbelessautomatedthantoday'smarkets
ViewAnswer
Answer:a
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15. 33.Thespreadmaybestbedefinedas:
a)thecompensationduetheleadunderwriter
b)thetotalcompensationforthoseparticipatinginthedistributionprocess
c)thepricefinallypaidbythepublicfortheshares
d)theproceedsfromthedistributionreceivedbythefirm
ViewAnswer
Answer:b
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34.Privateplacementinvolvessellingsecuritiesdirectlyto:
a)insurancecompanies
b)pensionfunds
c)wealthyindividuals
d)alloftheabovearecorrect
ViewAnswer
Answer:d
35.Inaleaseversusborrowtopurchasedecisiontheappropriatediscountrate,
exceptforthesalvagevalue,is:
a)thecostofcapital
b)theaftertaxcostofdebt
c)thecostofequitycapital
d)thecostofthedebt
ViewAnswer
Answer:b
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36.Preferredequityhasallofthefollowingcharacteristicsexcept:
a)fixeddividends
b)thecumulativerighttoannualdividends
c)precedenceovercommonstockdividends
d)residualclaimtoincome
ViewAnswer
Answer:d

16. 37.Underthemarginalprincipleofretainedearnings:
a)thefirmmustcomparewhatitcanearnwithwhatshareholderscouldearnon
fundsiftheyweredistributed
b)allfundsaboveandbeyondretainedearningsarepaidtoshareholders
c)fundsnotpaidtocreditorsandpreferredshareholdersbelongtocommon
shareholders
d)allprojectsarefinancedinternally
ViewAnswer
Answer:a
38.Astockdividend:
a)representsadistributionofadditionalsharestocommonshareholders
b)differsfromastocksplitlargelyinsize
c)normallyhasnorealvaluetotheinvestor
d)alloftheabovearecorrect
ViewAnswer
Answer:d
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39.Debtthatisnotsecuredbyspecificassetsiscalled:
a)anindenture
b)adebenture
c)amortgageagreement
d)commonstock
ViewAnswer
Answer:b
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40.Aconvertiblesecurityis
a)convertibleintocashattheoptionoftheholder
b)abondorshareofpreferred,convertibleintocommonatthefirm'soption
c)abondorshareofpreferred,convertibleintocommonattheholders'option
d)asecurityconvertibleintoadebentureattheholder'soption
ViewAnswer
Answer:c

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