Question 1

Amalgamated Binding Consolidators takes 20 days to convert its raw materials to finished goods, 5 days to sell it, and 15 days to collect its credit sales. What is the company’s days receivable period?

Options :

A : 5 days

B : 15 days

C : 20 days

D : 40 days

Answer: B

Question 2

Which of the following are reasons for companies to use controlled disbursement?

I.To obtain timely check presentment information

II.To enhance supplier relationships

III.To increase their available cash

IV.To improve their overall creditworthiness

Options :

A : I and III only

B : II and IV only

C : I, III, and IV only

D : I, II, III, and IV

Answer: A

Question 3

T-bill discount rate = 5.85%

T-bill face value = $100,000

Initial term = 90 days

If the U.S. Treasury was considering issuing a 91-day T-bill at the same time as this T-bill,

what discount rate would cause both instruments to have the same purchase price?

Options :

A : 5.71%

B : 5.79%

C : 5.87%

D : 5.92%

Answer: B

Question 4

The issue of corporate governance in publicly traded companies arises from:

Options :

A : the separation of shareholder ownership and management control.

B : the conflict between the interests of bond holders and equity holders.

C : the secrecy surrounding the proceedings of board of directors meetings.

D : the inherent conflict of interest that exists when accounting firms are paid to provide audit services.

Answer: A

Question 5

Which agency implements monetary policy through purchases and sales of treasury securities?

Options :

A : Federal Deposit Insurance Corporation

B : Fannie Mae

C : Office of the Comptroller of the Currency

D : Federal Reserve

Answer: D

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