Financial leverage may be defined as the potential use of variable financial costs to magnify the effects of changes in earnings before interest and taxes (EBIT) on a firm’s earnings per share (EPS). Indicate whether the statement is true or false ANSWER FALSE
The effect of financial leverage is such that an increase in a firm’s earnings before interest and taxes (EBIT) results in a more than proportional increase in the firm’s earnings per share (EPS), while a decrease in the firm’s EBIT results in a less than proportional decrease in EPS. Indicate whether the statement is true […]
________ occurs when a firm buys back some of its own common shares. A) A leveraged buyout B) An IPO C) A share repurchase D) Secondary offering ANSWER C
A public equity offering A) makes the securities being issued available to “retail” investors. B) makes the securities being issued available to large institutional investors. C) is usually more expensive than a private placement. D) All of the above are true. ANSWER D
Whenever the percentage change in earnings per share (EPS) resulting from a given percentage change in sales is greater than the percentage change in sales, financial leverage exists. Indicate whether the statement is true or false ANSWER FALSE
Which of the following statements regarding a share repurchase is NOT true? A) Share repurchases occur most commonly as open market repurchases. B) The firm typically buys its shares just like any investor would purchase stocks listed on a stock exchange. C) A firm often announces its intention to repurchase a certain number of its […]
Value proposition refers to a statement that describes the unique features of the firm’s products and services. Indicate whether the statement is true or false ANSWER FALSE
Commercial paper issues have maturities ranging from ________. A) six months to one year B) one year to three years C) three days to 270 days D) 0 to 30 days ANSWER C
Which of the following statements about public offerings is NOT true? A) A public offering is the most common type (vs private) for equity securities. B) Public offerings are usually more expensive than a private placement. C) The issuing process typically completes within one month. D) All of the above are true. ANSWER […]
The strategic and tactical choices that a firm makes lead to the firm’s marketing mix which is referred to as the Four P’s of Marketing. They are: A) distinguishing between who buys the product and who consumes it. B) determining the channel through which the product or service is purchased. C) assessing the firm’s plant […]