Finance

In a revolving credit agreement, the firm pays interest on ________.

In a revolving credit agreement, the firm pays interest on ________. A) the full line of credit B) the unused portion of the line of credit C) the amount actually borrowed and compensating balance D) the amount actually borrowed and commitment fees on any unused portion of the loan     ANSWER D

Read full post

Date: September 19th, 2020

Under U.S. Bankruptcy code, claims against the firm are prioritized al

Under U.S. Bankruptcy code, claims against the firm are prioritized along the lines of secured creditors followed in order by: A) preferred stock holders, common stock holders, and then unsecured creditors after all others have been compensated. B) unsecured creditors, preferred stock holders, and then common stock holders after all others have been compensated. C) […]

Read full post

Date: September 19th, 2020

Which of the following statements is most accurate in the M&M world in

Which of the following statements is most accurate in the M&M world including taxes and financial distress? A) Overall market value of the firm = market value of all-equity firm – value of interest tax shield — costs of financial distress B) Overall market value of the firm = market value of all-equity firm + […]

Read full post

Date: September 19th, 2020

If the firm has earnings available to common shareholders, it has two

If the firm has earnings available to common shareholders, it has two choices of what to do with these earnings: it can either ________ or ________. A) pay dividends to the common shareholders; retain the earnings to finance future projects and investments. B) pay dividends to the preferred shareholders; repurchase common stock. C) pay dividends […]

Read full post

Date: September 19th, 2020