The term structure of interest rates:
a. changes daily to reflect current competitive conditions in the money and capital markets.
b. plots returns for securities of different risk.
c. shows the relative interest spread between bonds with different risk ratings such as AAA, AA, A, BBB, etc.
d. depicts interest rates for T-bills over the last year.
12. RFID chips have been used to:
a. track livestock.
b. track marathon runner\'s time.
c. track inventory at retailers.
d. all of these.
13. Permanent current assets are not a factor in a manager\'s decision-making process when all current assets will be:
a. financed by short-term debt.
b. long-term in nature.
d. internally financed.
14. Which of the following yield curves would be characteristic during a period of high economic growth?
a. Upward sloping
b. Downward sloping
15. The corporate sweep account is an account:
a. that allows companies to maintain zero balances in their checking accounts, with their excess cash moved into an interest earning account.
b. that allows companies to write checks on zero balance accounts with the understanding that when the check is presented for payment, money will be moved from the interest bearing account to the appropriate payment account.
c. that allows companies to move their lock box collections into an interest bearing checking account.
d. a and b are correct.
16. International cash management systems are more complex than domestic cash management systems because:
a. many developing countries still use a cash payments system.
b. some countries rely on electronic funds transfer more than the U.S.
c. liquidity management, involving short-term cash balances and deficits, has to be managed across international boundaries and time zones and is subject to the risks of currency fluctuations.
d. none of these.
17. Under normal conditions (70% probability), Plan A will produce $20,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $100,000 less than Plan B. What is the expected value of returns?
18. Massa Machine Tool expects total sales of $60,000. The price per unit is $10. The firm estimates an ordering cost of $25 per order, with an inventory cost of $0.70 per unit. What is the optimum order size?
a. 327 units
b. 655 units
c. 447 units
d. 207 units
19. Normally, permanent current assets should be financed by:
a. long-term funds.
b. short-term funds.
c. borrowed funds.
d. internally generated funds.