Operating leverage is present when a firm has fixed operating costs. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Currently in the United States, it is not legal to issue different classes of common stock. For instance, issuing two classes of common stock where one class has superior voting rights compared to the other. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Under conditions of asymmetric information, when a firm issues debt this is more likely to be a NEGATIVE signal, rather than a positive signal regarding the firm’s future prospects. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Demand risk refers to: A) the probability that actual supply for the products or services will exceed anticipated supply. B) the probability that actual supply for the products or services will fall short of anticipated supply. C) the probability that actual demand for the products or services will exceed anticipated demand. D) the probability that […]
Date: September 19th, 2020
Whenever the percentage change in earnings before interest and taxes resulting from a given percentage change in sales is greater than the percentage change in sales, operating leverage exists. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Common shares are perpetual instruments, lasting as long as the firm itself lasts. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Marketing analysis involves all of the following EXCEPT: 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 capacities. D) determining the unique features of the target market. ANSWER C
Date: September 19th, 2020
According to data presented by the author, corporate tax rates in the United States are among the lowest across major economies. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
For firms that are able to raise funds through the sale of commercial paper, it is generally cheaper than borrowing from a commercial bank. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
According to Modigliani and Miller (M&M), in a world of perfect capital markets, except that interest on debt is tax deductible, what will be the expected equity return (or cost of equity) for a firm that has a cost of capital of 14 percent, a cost of debt of 8 percent, a tax rate of […]
Date: September 19th, 2020
