Ch_19_20_S_Key - CF9Ch19_20Q1F11 Key 1 GT Motors regularly...

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1 CF9Ch19_20Q1F11 Key 1. GT Motors regularly issues short-term debt to finance its daily operations. Suddenly, the credit markets froze and no funds were available for borrowing. Fortunately, the firm had some cash reserves saved that it was able to use to fund its operations until additional credit was available. The need to retain cash for situations such as this is referred to as which one of the following motives for holding cash? A. speculative B. float C. compensating D. precautionary E. transaction Refer to section 19.1 2. An account into which funds are deposited only in an amount equal to the value of the checks presented for payment that day is called a _____ account. A. lockbox B. concentration C. zero-balance D. compensating balance E. revolving Refer to section 19.4 3. Check kiting is: A. used by most firms as an ethical means of handling its cash reserves. B. the process of withdrawing all funds from a bank account as soon as the funds are available. C. the central core of a good cash management system. D. using uncollected cash to invest in short-term, liquid assets. E. increasingly popular due to recent banking law changes. Refer to section 19.2 4. Which one of the following statements is correct concerning zero-balance accounts? A. Each zero-balance account is offset by a compensating balance account. B. Zero-balance accounts are used for depositing incoming funds. C. A master account must be used in conjunction with a zero-balance account. D. Zero-balance accounts are used solely in conjunction with a lockbox system. E. Zero-balance accounts are still required to maintain a minimal balance. Refer to section 19.4
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2 5. Money market securities have which of the following characteristics? I. long maturities II. low default risk III. high degree of liquidity IV. low rates of return A. I and III only B. II and III only C. I and IV only D. II, III, and IV only E. I, II, III, and IV Refer to section 19.5 6. Yesterday, the president of RB Enterprises received a phone call from DLK, a competitor. DLK is a sole proprietorship. An unexpected family situation has caused the owner to suddenly want to retire and relocate closer to his family. Thus, the
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Ch_19_20_S_Key - CF9Ch19_20Q1F11 Key 1 GT Motors regularly...

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