Match Each Description Below to the Appropriate Term (A-G)

question 27

Multiple Choice

Match each description below to the appropriate term (a-g) .
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-A form of an interest-bearing note

• A)Contract rate
• B)Effective rate
• C)Bond discount
• D)Bond premium
• E)Bond
• F)Bond indenture
• G)Principal

Assess the impact of budgeting on financial decision-making.

Analyze the components of a manufacturing budget, including direct materials, direct labor, and manufacturing overhead.

Understand the calculation and significance of production needs in budgeting.

Recognize the role of sales forecasting in budget preparation.

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Definitions:

Residual Dividend Policy

A method where dividends are based on earnings minus capital expenditures and working capital needs; basically, dividends are paid from leftover or residual earnings.

Target Capital Structure

The mix of debt, preferred stock, and common equity with which the firm plans to finance its investments. Companies often target a specific structure to optimize their cost of capital.

Capital Requirements

The amount of capital a bank or financial institution must hold to meet regulatory requirements and cover potential losses.

Dividend Payment

A distribution of a portion of a company's earnings to shareholders, typically in the form of cash or additional stocks.