B 6- Financial Decisions, Financial Risk Managment

To reduce the coupon rate on the bonds being sold.

To cause the price of the company's stock to rise.

To reduce the risk for existing bondholders.

To lower the company's bond rating.

Bonds.

Short-term debt

Long-term debt

Common stock.

Callable.

Floating-rate

Zero-coupon.

Convertible

Risk indifferent.

Risk seeking.

Cautious.

Risk averse.

Cautious.

Risk seeking.

Risk averse

Risk indifferent.

Firm-specific risks.

Unsystematic risks.

Non-market risks.

Systematic risks.

U.S. Treasury securities.

Federal government agency securities.

Bankers' acceptances.

Repurchase agreements

Interest rate risk

Liquidity risk.

Financial risk

Purchasing power risk.

Hedgehog will not exercise the option and sell local currency units collected from its receivable at the spot rate.

Hedgehog will be indifferent as to whether it exercises the option or not.

Hedgehog will sell the option at the settlement date and combine its proceeds along with local currency units purchased at the spot rate to maximize its revenue.

Hedgehog will exercise its option and sell the proceeds of its accounts receivable collection under the provisions of the option contract at a gain.

Hedgehog should acquire parallel loans to provide a means for liquidating unneeded hedge securities

Hedgehog should acquire the maximum amount required to hedge known and projected transactions

Hedgehog should acquire the minimum amount required to hedge known transactions.

Hedgehog should enter into a cross hedging agreement.

Selling British pound call options.

Buying British pound put options

Buying British pound call options.

Selling British pound put options.

Enter into a forward contract to sell 30,000 euros in 30 days

Buy 30,000 euros now.

Platinum cannot effectively reduce this risk

Enter into an interest rate swap contract for 30 days.

As inflation associated with a foreign economy increases in relation to a domestic economy, demand for the foreign currency falls.

As inflation associated with a foreign economy decreases in relation to a domestic economy, demand for the foreign currency falls.

As inflation associated with a foreign economy increases in relation to a domestic economy, demand for the foreign currency increases.

Inflation is irrelevant to currency demand.

As inflation associated with a foreign economy increases in relation to a domestic economy, demand for the foreign currency falls.

As inflation associated with a foreign economy decreases in relation to a domestic economy, demand for the foreign currency falls.

As inflation associated with a foreign economy increases in relation to a domestic economy, demand for the foreign currency increases

Inflation is irrelevant to currency demand

Atlas will suffer an economic loss in the event it has net cash outflows of a foreign currency and the foreign currency appreciates

Atlas will suffer an economic loss in the event it has net cash inflows of a foreign currency and the foreign currency appreciates.

Atlas will enjoy an economic gain in the event it has net cash outflows of a foreign currency and the foreign currency depreciates

Atlas will suffer an economic loss in the event it has net cash inflows of a foreign currency and the foreign currency depreciates.

Universal is subject to transaction and translation exposures to exchange rate risk.

Universal is subject to economic and translation exposures to exchange rate risk.

Universal is subject to potential transaction, economic and translation exposures to exchange rate risk.

Universal is subject to potential transaction and economic exposures to exchange rate risk.

The fluctuation in the foreign currency's exchange rate has no effect on the U.S. company's sales or cost of goods sold.

The foreign company will be disadvantaged in the U.S. market.

It is better for the U.S. company when the value of the U.S. dollar strengthens.

The foreign company will have an advantage in the U.S. market.

They make imports cheaper and exports more expensive.

They automatically correct a lack of equilibrium in the balance of payments.

They impose constraints on the domestic economy.

They eliminate the need for foreign currency hedging.

The dollar depreciates against the euro.

The euro will buy fewer U.S. goods

The euro depreciates against the dollar

The euro will buy fewer European goods.

Recessions.

High interest rates

Labor strikes.

Inflation.

Marginal risk.

Interest rate risk.

Business risk.

Financial risk.

Purchasing power risk premium.

Credit risk premium

Default risk premium.

Maturity risk premium.

Interest rate futures.

A fixed interest, five-year note payable

A contract to purchase a commodity in six months at a price determined today

An agreement to buy a piece of equipment in six months at a price determined today

Sell a specific security at fixed conditions of price and time.

Buy a specific security at a fixed price for an indefinite time period.

Buy a specific security at fixed conditions of price and time.

Sell a specific security at a fixed price for an indefinite time period.

Futures contract on a stock.

Interest rate swap agreement

Structured short-term note.

Forward contract on a commodity.

Scattergraph method.

Expected value (EV).

Cost-volume-profit analysis

Program evaluation and review technique (PERT).