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17 Cards in this Set
- Front
- Back
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As finance emerged as a new field, much emphasis was placed on mergers and acquisitions.
True False |
TRUE
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Businesses will increasingly rely on B2B Internet applications to speed up the cash flows through their firms.
True False |
TRUE
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Financial markets exist as a vast global network of individuals and financial institutions that may be lenders, borrowers, or owners of public companies worldwide.
True False |
TRUE
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Total assets of a firm are financed with liabilities and stockholders equity.
True False |
TRUE
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The primary purpose of the cash budget is to plan accounts payable payments.
True False |
FALSE
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The primary purpose of the cash budget is to allow the firm to anticipate the need for outside funding or excess funds to be invested.
True False |
TRUE
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An increase in accounts receivable and a decrease in accounts payable will reduce the amount of new external funds required.
True False |
FALSE
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Discounting refers to the growth process that turns $1 today into a greater value several periods in the future.
True False |
FALSE
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Compounding refers to the growth process that turns $1 today into a greater value several periods in the future.
True False |
TRUE
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The time value of money is not a useful concept in determining the value of a bond or in capital investment decisions.
True False |
FALSE
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Cash flow decisions that ignore the time value of money will probably not be as accurate as those decisions that do rely on the time value of money.
True False |
TRUE
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The interest factor for the present value of a single sum is equal to (1 + i)/i.
True False |
FALSE
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In evaluating capital investment projects, current outlays must be judged against the current value of future benefits.
True False |
TRUE
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In paying off a mortgage loan, the amount of the periodic payment that goes toward the reduction of principal increases over the life of the mortgage.
True False |
TRUE
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The discount rate depends on the market's perceived level of risk associated with an individual security.
True False |
TRUE
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By using different discount rates, the market allocates capital to companies based on their risk, efficiency, and expected returns.
True False |
TRUE
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The risk-free rate of return is equal to the inflation premium plus the real rate of return.
True False |
TRUE
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