Tangshan Mining issued $10,000 of commercial paper for $9,925 for 60 days. Based on this information, the effective annual rate of interest on the commercial paper would be about 10 percent. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
When a firm needs to raise money via a bond issue, one of the quickest ways is through a ________. This activity involves the purchase of a large block of securities by a large institutional investor such as a pension fund, an endowment fund, or an insurance company. A) private placement. B) public placement. C) […]
Date: September 19th, 2020
The empirical evidence from various and historical U.S. financial asset classes reported by the author DOES NOT support the financial axiom that to achieve greater return an investor must take greater risk. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Exchange rate risk can often be hedged by using currency forward, futures, or options markets. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Assume perfect capital markets except that taxes DO exist. Why does the value of the interest tax shield accrue entirely to the shareholders and none of the value goes to the bondholders? What will be an ideal response? ANSWER The value of the firm increases by the value of the interest tax shield […]
Date: September 19th, 2020
The size and current growth stage of the firm must also be considered as a part of the marketing analysis. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm is evaluating the best means to have a positive impact on potential buyers; which one of the four P’s is the firm addressing? A) Product B) Price C) Place D) Promotion ANSWER D
Date: September 19th, 2020
When a firm has fixed operating costs, operating leverage is present. In that case, an increase in sales results in a more-than-proportional increase in EBIT, and a decrease in sales results in a more-than-proportional decrease in EBIT. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The interest paid by the issuer of commercial paper is determined by the size of the discount and the length of time to maturity. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Direct forms of bankruptcy costs include legal and administrative costs associated with the actual bankruptcy proceedings, as well as the money paid to lawyers. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
