Question 1

The Single-A and triple-B bonds are strong enough to be called _______________, and they are the lowest-rated bonds that many banks and other institutional investors are permitted by law to hold.

Accepted Answer

Investment grade bonds are generally considered to be the safest and lowest-risk category of bonds. Single-A and Triple-B bonds fall within this category and are considered relatively safe investments, which is why many banks and institutional investors are legally allowed to hold them. The other options - public service bonds, floating rate bonds, and coupon bonds - do not accurately describe the characteristics or rating of these bonds.

Question 2

Who was the first PC manufacturer to use the Web to take customer orders?

Accepted Answer

Dell was the first PC manufacturer to use the Web to take customer orders, pioneering the direct-to-consumer model online.

Question 3

An option that gives the right to sell a stock at a specified price during some period in the future, this is called:

Accepted Answer

This option is called a put option, which gives the investor the right to sell a stock at a predetermined price during a specific period in the future.

Question 4

What is used to designate any debt sold in a country other than the one in whose currency the debt is denominated?

Accepted Answer

Euro-debt refers to any debt issued in a currency other than that of the country where it is issued. The term is not limited to the Euro currency, but originated from the early days of the Eurobond market in the 1960s.

Question 5

The heart of __________________ is the security agreement, a standardized document on which the specific pledged assets are listed.

Accepted Answer

The Uniform Commercial Code (UCC) governs secured transactions and the heart of such transactions is the security agreement, which is a standardized document on which the specific pledged assets of the debtor are listed. The other answer choices, such as Factoring Account Code, Pledged Account Code, and Crediting Resource Code, are not relevant to secured transactions and do not involve security agreements as their core component.

Question 6

Information system, that help seize opportunities are called:

Accepted Answer

Strategic information systems are designed to help an organization achieve its strategic goals and seize opportunities, by providing information and analysis to support decision-making and strategic planning. Confiscate, appropriate, and restore information systems do not accurately describe systems designed for this purpose.

Question 7

Which element id needed for the establishment of a field warehouse?

Accepted Answer

All of the above elements are essential for the establishment of a field warehouse. Public notification is necessary to inform potential customers about the availability of the warehouse. Physical control of the inventory is crucial to ensure the safety and security of the stored goods. Finally, supervision by a custodian of the field warehousing concern is essential to ensure the proper handling and management of the warehouse. Therefore, all of these elements are needed for the establishment of a field warehouse.

Question 8

Which of the following is NOT the source of short-term funds?

Accepted Answer

Payable concentration is not a source of short-term funds; it is a cash management technique.

Question 9

For IS planning to be successful, top management must:

Accepted Answer

For IS planning to be successful, top management must recognize IT as an indispensable resource, understand that IT is a complex resource, and regard ISs as a source for gaining strategic goals. Only when top management has a clear understanding of the role IT can play in achieving business goals can effective IS planning take place. Therefore, option D is the correct choice.

Question 10

A long-term contract under which a borrower which a borrower agrees to make payments of interest and principal on specific dates to its holder is called:

Accepted Answer

A bond is a long-term contract under which a borrower agrees to make payments of interest and principal on specific dates to its holder. Loans, mortgages, and credit may also involve payments of interest and principal, but they typically do not have the specific dates and terms that are included in a bond agreement.

Question 11

A high-ranking officer, who commands sufficient political clout to promote the idea that a new system is needed and when the go-ahead is granted to remove obstacles as the project progresses, is known as:

Accepted Answer

A champion is someone who has the political clout and vision to promote a new system and remove obstacles as the project progresses. A professional is someone who has specialized knowledge and skills in a particular field, but may not necessarily have the power to drive change. Certified refers to someone who has taken and passed an exam indicating their skills and knowledge. An advocate is someone who speaks in favor of a particular issue, but may not have the same level of influence as a champion.

Question 12

What involves more trading monitoring of the portfolio and may be motivated by a philosophy that the investor can beat the market?

Accepted Answer

The active investment strategy involves more monitoring of the portfolio and is typically motivated by the belief that the investor can outperform the market. Yield-spread investment strategy is a specific type of investment strategy that focuses on the spread between yields of different types of fixed-income securities. Passive investment strategy is characterized by a buy-and-hold approach and aims to match the performance of a particular market index. None of the above is not the answer as one of the choices is the correct answer.

Question 13

If earnings are poor and stockholders are dissatisfied, an outside group might solicit the proxies in an effort to overthrow management and take control of the business, this is known as:

Accepted Answer

A proxy fight is a situation in which an outside group attempts to gain control of a company by soliciting the proxies of current stockholders. This is often done in response to poor earnings or dissatisfied stockholders. The other answer options are not commonly used terms in business or finance.

Question 14

A firm uses more short-term sources, its debt costs are low, profits are high and solvency is low with:

Accepted Answer

The use of more short-term sources indicates an aggressive financing strategy, which leads to low debt costs and high profits. However, this also means that the firm's solvency is low as short-term debt needs to be repaid in the near future.

Question 15

What refers to how easy it is to augment hardware and software and their use as the business grows?

Accepted Answer

Scalability refers to the ability of hardware and software to grow or expand as the business grows. This includes adding more users, increasing storage capacity, and upgrading hardware and software versions. It is important for businesses to consider scalability when selecting technology solutions to avoid having to make expensive and disruptive changes down the road.

Question 16

What involves the purchase of accounts receivables by the lender, generally without resource to the borrower?

Accepted Answer

Factoring involves a lender purchasing accounts receivable from a borrower without any recourse to the borrower. The lender assumes the risk of non-payment by the debtor and collects payment directly from them. Option A refers to a specific company's financing, option B refers to using accounts receivable as collateral for a loan, and option D refers to the cost of borrowing money, none of which accurately describe the purchase of accounts receivable by a lender through factoring.

Question 17

Information system (IS) planning includes which of the following sep that is part of any successful planning process?

Accepted Answer

Successful IS planning should include all three steps: creating a corporate and IS mission statement, articulating the vision for IT within the organization, and creating IS strategic and tactical plans. Together, these steps provide a comprehensive framework for aligning IT initiatives with business goals and ensuring that the organization's IS resources are optimized for strategic advantage.

Question 18

__________________ represents the average time it takes to collect credit accounts.

Accepted Answer

Days sales outstanding (DSO) measures the average number of days it takes for a company to collect payments from its customers. It is calculated by dividing accounts receivable by the average daily credit sales. Therefore, A is the correct choice as it directly relates to the average time it takes to collect credit accounts. B is not a commonly used term in finance, C refers to the set of rules a company has in place for collecting debts, and D is not a term in finance.

Question 19

Banks sometimes require borrowers to maintain an average demand deposit balance equal to from 10 percent to 20 percent of the amount borrowed, this is called:

Accepted Answer

The requirement for borrowers to maintain an average demand deposit balance equal to a percentage of the amount borrowed is known as a compensating balance. This is often required by banks as a way to ensure that borrowers maintain a certain level of liquidity, and it can range from 10 percent to 20 percent of the amount borrowed. A line of credit refers to a maximum amount of credit that a borrower can access, while a commitment fee is a fee charged by a lender to keep a line of credit open for a borrower. A revolving credit agreement is a type of credit facility where borrowers can continually access funds up to a certain limit, and repay and re-borrow as needed. None of these options accurately describes the requirement for maintaining a demand deposit balance.

Question 20

The expenses incurred when a customer stops buying a product or service from one business and starts buying it from another are called:

Accepted Answer

These costs are commonly referred to as switching costs. They include the expenses incurred when a customer decides to switch to a different product or service provider, such as cancellation fees, installation fees, and the costs associated with learning to use a new product or service.

Exam 1: Certified Business Manager