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
________ is 100 percent minus total variable operating costs as a percentage of total sales. A) Profit margin B) Contribution margin C) Expense ratio D) Fixed coverage ratio ANSWER B
Date: September 19th, 2020
Ransom Industries Inc, has issued preferred stock that pays $3.00 dividends annually. If the market requires a 12.5% rate of return on the shares, what is the current price of the firm’s preferred shares? A) $21.33 B) $24.00 C) $41.67 D) There is not enough information to answer this question. ANSWER B Explanation: […]
Date: September 19th, 2020
A bank lends a firm $1,000,000 for one year at 12 percent on a discounted basis 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) 12 percent B) 13.3 percent C) 13.6 percent D) 15.4 percent […]
Date: September 19th, 2020
Value is created when the industry is profitable and the firm is in a disadvantaged competitive position within the industry. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A(n) ________ effectively raises the interest cost to the borrower on a line of credit. A) operating-change restriction B) annual cleanup C) compensating balance D) commitment fee ANSWER C
Date: September 19th, 2020
