Question 1

In addition to the interest rate on a line of credit, financial institutions ale also compensated through

either:

Options :

A : Commitment fees

B : Compensating balance

C :

Both A & B

D : Neither A nor B

Answer: C

Question 2

A health care organization that utilizes an aggressive asset mix strategy seeks to minimize its returns

by investing in non-liquid assets but faces the risk of lower liquidity.

Options :

A : True

B : False

Answer: B

Question 3

The rate of return required undertaking a project; the cost of capital accounts for both the time value of money and risk refers to:

Options :

A : Cost of return

B : Cost of capital

C : Cost of risk

D : Cost of revenue

Answer: B

Question 4

Selling accounts receivable at a discount, usually to a financial institution is called:

Options :

A : Factoring

B : Discounted rate

C : Financial accounts

D : None of the above

Answer: A

Question 5

Debt service coverage is equal to:

Options :

A : (gross income + debts + depreciation + amortization) / maximum half year debt service payments

B : (net income + interest + depreciation + amortization) / maximum annual debt service payments

C : (net income + expenses + depreciation + amortization) / minimum annual interest service payments

D : (net income + revenues + appreciation + amortization) / minimum half year interest service payments

Answer: B

Higher Test Marks with Free Online CHFP Exam Practice