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MIE 201 TEST 5 MAKANUI QUESTIONS AND ANSWERS / LATEST
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MIE 201 TEST 5 MAKANUI QUESTIONS AND ANSWERS / LATEST
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MIE 201 TEST 5 MAKANUIcommercial certificates of deposit (CDs) - ANSWERS-certificates of deposit issued
by commercial banks and brokerage companies, available in minimum amounts of
$100,000, which may be traded prior to maturity
commercial paper - ANSWERS-a written promise from one company to another to
pay a specific amount of money
eurodollar market - ANSWERS-a market for trading U.S. dollars in foreign
countries
trade credit - ANSWERS-credit extended by suppliers for the purchase of their
goods and services
line of credit - ANSWERS-an arrangement by which a bank agrees to lend a
specified amount of money to an organization upon request
secured loans - ANSWERS-loans backed by collateral that the bank can claim if the
borrowers do not repay them
unsecured loans - ANSWERS-loans backed only by the borrower's good reputation
and previous credit rating
,principal - ANSWERS-the amount of money borrowed
interest - ANSWERS-a percentage of the principal that the bank charges for use of
its money
prime rate - ANSWERS-the interest rate that commercial banks charge their best
customers (usually large corporations) for short-term loans
factor - ANSWERS-a finance company to which businesses sell their accounts
receivable- usually for a percentage of the total face value
long-term (fixed) assets - ANSWERS-production facilities (plants), offices, and
equipment-all of which are expected to last for many years
capital budgeting - ANSWERS-the process of analyzing the needs of the business
and selecting the assets that will maximize its value
equity financing - ANSWERS-raising funds by attracting new owners
debt financing - ANSWERS-raising funds by taking on long-term liabilities
long-term liabilities - ANSWERS-debts that will be repaid over a number of years,
such as long-term loans and bond issues
, bonds - ANSWERS-debt instruments that larger companies sell to raise long-term
funds
indenture - ANSWERS-a bond contract that specifies all of the terms of the
agreement between the bondholders and the issuing organization
unsecured bonds - ANSWERS-debentures or bonds that are not backed by specific
collateral
secured bonds - ANSWERS-bonds that are backed by specific collateral that must
be forfeited in the event that the issuing firm defaults
serial bonds - ANSWERS-a sequence of small bond issues of progressively longer
maturity
floating-rate bonds - ANSWERS-bonds with interest rates that change with current
interest rates otherwise available in the economy
junk bonds - ANSWERS-a special type of high interest rate bond that carries higher
interest risks
retained earnings - ANSWERS-earnings after expenses and taxes that are
reinvested in the assets of the firm and belong to the owners in the form of equity
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