An INVERTED yield curve is characterized by long-term rates exceeding short-term rates. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Under conditions of perfect capital markets, M&M insist that the value of the levered firm is greater than the value of the unlevered firm. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A bond rated “D” by Standard and Poor’s rating service is in default on its financial commitments. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Short-term loans that businesses obtain from banks and through commercial paper are ________. A) negotiated and secured B) negotiated and unsecured C) spontaneous and secured D) spontaneous and unsecured ANSWER B
Date: September 19th, 2020
________ costs require the payment of a specified amount in each accounting period. A) Operating B) Variable C) Semi-variable D) Fixed ANSWER D
Date: September 19th, 2020
In case of a manufacturing organization, which of the following is a variable cost that varies directly with the sales volume? A) interest cost B) dividend cost C) shipping cost D) rental cost ANSWER C
Date: September 19th, 2020
The major real-world benefit of debt is that interest payments are: A) made after tax considerations. B) a tax-deductible expense. C) always less than 10% of the firm’s profit. D) smaller than the dividend payments. ANSWER B
Date: September 19th, 2020
Bond covenants place some restrictions on the firm in such a way as to improve the odds that the bondholders will be repaid. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Empirical evidence suggests that retail firms such as Safeway have a shorter working capital gap than a heavy manufacturing firm such as Boeing. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following is TRUE about the threat of new entrants? A) New entrants often increase capacity within the industry. B) The easier to enter an industry, the higher the profit margins and growth potential. C) If competitors are strong, existing competitors will not react strongly to any new entrants. D) If there are […]
Date: September 19th, 2020
