Firms hold cash, in part, to satisfy compensating balance requirements. Compensating balances are cash balances held at:
A) the firm in excess of its transactions needs.
B) the firm that are below that of its transactions needs.
C) the firm in excess of its cash inflows.
D) commercial banks to pay implicitly for bank services.
E) commercial banks as emergency funds.
D) commercial banks to pay implicitly for bank services.
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Answer the following statements true (T) or false (F)
1. Endowment funds are invested in perpetuity. 2. Equipment is considered a fixed asset. 3. Accrual basis accounting records financial transactions even when the organization does not have sufficient cash flow. 4. A statement of financial position shows a snapshot of the organization’s assets and liabilities at a point in time. 5. Endowment management is governed by state law.
Give a real life example of mitigating a risk, avoiding a risk, transferring a risk and retaining a risk.
Fill in the blank(s) with the appropriate word(s).
The difficulty of these questions as seen by students will depend on (1) what was discussed in class and (2) how long students have to answer the questions. If time is not an issue, then many of the questions could be classified as EASY, but under exam conditions with time pressure, many might be regarded as being CHALLENGING. So, consider the amount of time students have when selecting questions for an exam. Note that there is some overlap between the True/False and the multiple choice questions, as some T/F statements are used in the MC questions. One of the four most fundamental factors that affect the cost of money as discussed in the text is the current state of the weather. If the weather is dark and stormy, the cost of money will be higher than if it is bright and sunny,
other things held constant. Answer the following statement true (T) or false (F)
________ means shifting the consequences of a risk of a business to persons or organizations outside that business.
A. Risk forecasting B. Risk transfer C. Risk avoidance D. Risk assumption