In the United States, a corporation’s board of directors is elected by: A) bondholders only. B) bondholders and preferred stockholders C) bondholders, preferred stockholders, and common stockholders. D) common stockholders only. ANSWER D
Date: September 19th, 2020
A firm has fixed operating costs of $253,750, a sales price per unit of $100, and a variable cost per unit of $65. The firm’s operating breakeven point in dollars is ________. A) $725,000 B) $700,000 C) $906,250 D) $390,385 ANSWER A
Date: September 19th, 2020
A firm arranges a discount loan at a 12 percent interest rate, and borrows $100,000 for one year. The stated interest rate is ________ and the effective interest rate is ________. A) 12.00%; 12.00% B) 13.64%; 12.00% C) 12.00%; 13.64% D) 12.00%; 10.71% ANSWER C
Date: September 19th, 2020
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
Date: September 19th, 2020
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) […]
Date: September 19th, 2020
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 + […]
Date: September 19th, 2020
One definition of LIBOR, is that it is the rate at which banks can borrow from one another. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ would be a common source of financing in international trade. A) Commercial paper B) Negotiable CDs C) Treasury bonds D) Banker’s acceptances ANSWER D
Date: September 19th, 2020
The cumulative feature of preferred stock means that preferred dividends cannot be paid until all common dividends have been paid. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A ________ guarantees the borrower that a specified amount of funds will be available regardless of the scarcity of money. A) revolving credit agreement B) mortgage loan C) short-term, self-liquidating loan D) single payment note ANSWER A
Date: September 19th, 2020
