Business Management - Test 2


1. What is the call price of a convertible bond?

    A. conversion ratio times the market price of common stock
    B. greater than the face value of the bond
    C. face value divided by the conversion ratio
    D. the value at maturity


2. Given a compound interest rate of 10% over 30 years, what will the future value of a $2,000 investment be?

    A. $25,000
    B. $30,000
    C. $40,000
    D. $64,500


3. Douglas McGregor is associated with which of the following?

    A. scientific management
    B. motivational factors
    C. Theory X and Theory Y
    D. equity theory


4. Roughly what percentage of all US companies are classified as small businesses?

    A. 25
    B. 50
    C. 90
    D. 70


5. Which of the following would NOT improve the current ratio?

    A. borrow short term to finance fixed assets
    B. issue long-term debt to buy inventory
    C. sell common stock to reduce current liabilities
    D. sell fixed assets to reduce accounts payable


6. What was NOT a major factor in Facebook's purchase of Instagram?

    A. Facebook had cash on hand
    B. Facebook's mobile apps were thin
    C. the purchase increased their userbase
    D. Instagram's earnings were high


7. Which of the following is a major disadvantage of a corporation?

    A. indeterminate lifespan
    B. double taxation
    C. difficulty in external funding
    D. legality in transfer of ownership


8. When the Fed decreases the reserve requirement, this action does what?

    A. decreases the money supply
    B. clears imbalances in the monetary system
    C. increases the money supply
    D. increases the amount of insurance for bank accounts


9. What is one advantage of a financial lease?

    A. has a shorter maturity than term loans
    B. never appears as a liability on the balance sheet
    C. eliminates periodic payments
    D. provides a way to indirectly depreciate land


10. Which technique is useful in determining levels of production, revenues, and costs?

    A. marginal analysis
    B. financial analysis
    C. breakeven analaysis
    D. technical analysis






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