AP Business: Financial Management and Securities Markets flashcards

Question 1

What do we call purchases that a buyer has received but not yet paid the seller for?

Accepted Answer

Accounts payable

Question 2

Which receivable-type item is a sale made to a customer that the firm has yet to collect payment on?

Accepted Answer

Accounts receivable

Question 3

What are the letter grades that rating agencies give to bond issues to signal their quality or risk?

Accepted Answer

Bond ratings

Question 4

What are long-term debt obligations issued by corporations and governments?

Accepted Answer

Bonds

Question 5

Which securities markets use brokers on a centralized trading floor to connect buyers and sellers, as national and regional exchanges?

Accepted Answer

Broker markets

Question 6

What do we call weighing long-term projects and picking the ones with top returns, while keeping the firm's value as high as possible?

Accepted Answer

Capital budgeting

Question 7

What are investments in long-lived assets expected to give benefits for longer than one year?

Accepted Answer

Capital expenditures

Question 8

What do we call the movement of cash into and out of a firm?

Accepted Answer

Cash flows

Question 9

What are measures that briefly halt securities trading in a cooling-off pause to limit a one-day market drop?

Accepted Answer

Circuit breakers

Question 10

What do we call an IOU: short-term debt with no collateral, issued by a financially strong corporation?

Accepted Answer

Commercial paper

Question 11

What security represents an ownership interest in a corporation?

Accepted Answer

Common stock

Question 12

Which securities markets execute buy and sell orders through dealers, also called market makers, linked by telecommunications networks?

Accepted Answer

Dealer markets

Question 13

What are payments made to stockholders out of a corporation's profits?

Accepted Answer

Dividends

Question 14

What security resembles a mutual fund, holding a broad basket of stocks around a theme, yet is traded on a stock exchange so its price shifts all day?

Accepted Answer

Exchange traded fund (ETF)

Question 15

What short-term financing method involves a firm selling its accounts receivable to a factor at a discount, outright?

Accepted Answer

Factoring

Question 16

What do we call the art and science of handling a firm's money so it can reach its goals?

Accepted Answer

Financial management

Question 17

What are binding legal obligations to buy or sell set amounts of commodities or financial instruments on a future date at a price agreed now?

Accepted Answer

Futures contracts

Question 18

What is the use of information not available to the public to profit from securities transactions?

Accepted Answer

Insider trading

Question 19

Which firms act as intermediaries between issuers and the public, buying securities from corporations and governments and then reselling them?

Accepted Answer

Investment bankers

Question 20

What is a long-term loan secured by real estate as collateral?

Accepted Answer

Mortgage loan

Question 21

What are bonds issued by state and local governments: states, cities, counties and their agencies?

Accepted Answer

Municipal bonds

Question 22

What financial-service company collects investors' money and buys a selection of securities fitting its stated investment goals?

Accepted Answer

Mutual fund

Question 23

What contracts entitle the holder to buy or sell set quantities of stocks or other instruments at a set price within a specified time?

Accepted Answer

Options

Question 24

What equity security has a dividend amount fixed at issuance that must be paid before common stockholders receive dividends?

Accepted Answer

Preferred stock

Question 25

In which securities market are new securities sold to the public?

Accepted Answer

Primary market

Question 26

What are profits a firm has reinvested in itself?

Accepted Answer

Retained earnings

Question 27

What guaranteed line of credit has a bank agreeing that a set amount of funds can be borrowed by a business over a given period?

Accepted Answer

Revolving credit agreement

Question 28

What basic finance principle says that greater risk requires a higher return?

Accepted Answer

Risk-return trade-off

Question 29

In which securities market are previously issued securities bought and sold among investors?

Accepted Answer

Secondary market

Question 30

What are loans for which the borrower must pledge specific assets as collateral?

Accepted Answer

Secured loans

Question 31

What are certificates of investment issued by corporations or governments that stand for either equity or debt?

Accepted Answer

Securities

Question 32

Who has a license to buy and sell securities for clients?

Accepted Answer

Stockbroker

Question 33

What is a business loan whose maturity is longer than one year and that may be secured or unsecured?

Accepted Answer

Term loan

Question 34

What do we call credit that a seller extends to a buyer between delivery of goods or services and payment for them?

Accepted Answer

Trade credit

Question 35

What is the process of purchasing securities from corporations and governments, then reselling to the public?

Accepted Answer

Underwriting

Question 36

What are loans where the borrower need not pledge specific assets as security?

Accepted Answer

Unsecured loans

AP Business: Financial Management and Securities Markets flashcards

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