Deck 8: Capital Financing for Health Care Providers

Question 1

A fund in which monies are set aside each year to ensure that a bond can be liquidated at maturity is a?

A) Sinking fund
B) Swimming fund
C) Bond fund
D) Term fund

Answer 1

Sinking fund

Question 2

Hedging is the art of off-setting high variable rate____________ payments with returns from variable rate______________.

A) Investments, debts
B) Bonds, investments
C) Debt, investments
D) Stock, debts

Answer 2

Debt, investments

Question 3

An asset with clear value that is pledged against a loan to reduce risk to the lender is:

A) Colloidal
B) Bonds
C) Collateral
D) Trustee

Answer 3

Collateral

Question 4

A debenture is:

A) A secured bond
B) An unsecured bond
C) Subject to harsh regulations
D) Non existent

Question 5

A secondary market deals with buying and selling bonds that have already been_______________.

A) Called
B) Forfeit
C) Issued
D) Exempted

Question 6

Tax-exempt bonds can be used by:

A) Any organization
B) Tax-exempt organizations
C) Tax paying organizations
D) No organization

Question 7

According to Fitch and S&P's bond ratings, which rating is highest?

A) AAAA
B) Aa
C) AAA
D) BBB

Question 8

The highest bond rating a health care provider can usually achieve is:

A) AA or Aa
B) BBB or Baa
C) Aaa or AAA
D) Ba or BB

Question 9

In a capital lease the lessor aims to lease the asset for_____________ of its economic life.

A) None
B) Virtually all
C) Virtually half
D) An insignificant amount

Question 10

An organization should borrow____________ -term funds for_____________ -term needs.

A) Long, short
B) Short, long
C) Short, short
D) None of the above

Question 11

Bonds can only be issued with a fixed rate.

Question 12

There are two types of leases: operating and capital.

Question 13

The primary sources of equity financing for for-profit organizations includes philanthropy and government grants.

Question 14

An operating lease is used for service equipment leased for periods longer than the equipment's economic life.

Question 15

Fixed rate bonds have no disadvantages.

Question 16

Any increase in assets must be balanced by a similar increase in debt or equity, or both.

Question 17

A letter of credit increases the number of bonds an organization can issue at a given time.

Question 18

Debt capacity is the amount of debt an organization can be reasonably expected to take on and pay off in a timely manner.

Question 19

Callable bonds are issued with no coupon.

Question 20

Bank term loans are usually paid in equal amounts over the life of the loan.