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
A firm has fixed operating costs of $10,000, the sale price per unit of its product is $25, and its variable cost per unit is $15. The firm’s operating breakeven point in units is ________ and its breakeven point in dollars is ________. A) 1,000; $6,250 B) 400; $10,000 C) 400; $25,000 D) 1,000; $25,000 […]
Date: September 19th, 2020
When sizing up the operations of the firm, it is important to examine: A) the quality of the firm’s products or services. B) how effective the processes are that the firm employs to operate the business. C) the capacity of the firm’s plant or facilities. D) All of the above. ANSWER D
Date: September 19th, 2020
In the event of bankruptcy and liquidation by a firm, all preferred shareholders receive any claims before common shareholders but after both secured and unsecured creditors. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
For an exporter to lose money after accepting a banker’s acceptance, A) both the importer and the importer’s bank would need to default on the agreement. B) the importer would have to default on the agreement. C) the exporter would have to default on the agreement. D) the federal government would need to step into […]
Date: September 19th, 2020
Commercial paper would be considered appropriate for funding which types of corporate needs? A) the purchase of capital equipment with lives of 5 years or longer B) seasonal needs for a retail firm C) financing long-term property purchases D) all of the above ANSWER B
Date: September 19th, 2020
In what ways are preferred shares like debt and in what ways are they like common equity? What will be an ideal response? ANSWER Like debt preferred shares are paid prior to equity and expect to receive a predetermined payout that must be paid prior to common stock holders receiving any. Further, neither […]
Date: September 19th, 2020
A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is ________. A) 8.9 percent B) 8 percent C) 7.2 percent D) 7.0 percent ANSWER A
Date: September 19th, 2020
Compared to a line of credit, a revolving credit agreement will be ________ for a firm. A) a lower cost, higher risk method of short-term borrowing B) a lower cost, lower risk method of short-term borrowing C) a higher cost, higher risk method of short-term borrowing D) a higher cost, lower risk method of short-term […]
Date: September 19th, 2020
