A bond rated AAA is perceived to have GREATER default risk than a bond rated BBB. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Use the information for Silicon Solutions found in Figure 11.1 and assume perfect capital markets (PCM) to determine the average cost of capital for the unlevered firm. Then determine the return on shares, the return on debt, and the average cost of capital for the levered firm. What do you think will happen to the […]
Date: September 19th, 2020
Which of the following is TRUE about the threat of substitutes? A) When threatened by substitutes, existing competitors will increase their prices. B) innovation makes an existing product or service more attractive to its customers. C) If there are numerous substitutes, the firm’s profit margins and revenues will decline. D) If the competitors are strong, […]
Date: September 19th, 2020
Managing inventory involves trading off the benefits of availability with various financial concerns such as storage, insurance, and obsolescence. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A loan that is usually a one-time loan made to a borrower who needs funds for a specific purpose for a short period is called a ________. A) term loan B) bill of exchange C) mortgage loan D) single-payment note ANSWER D
Date: September 19th, 2020
Stage 2 of the industry life cycle is characterized by all of the following EXCEPT: A) there is little demand for the company’s products and services. B) the firm’s revenue tends to grow rapidly. C) positive profits begin to materialize. D) private firms begin to “go public.” ANSWER A
Date: September 19th, 2020
Other things equal, it is more desirable to have a larger working capital gap. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Bond rating agencies: A) assess the credit worthiness of the firm. B) assess the possibility of default by a firm on the payment of its bonds. C) include firm’s such a Moody’s and Fitch. D) all of the statements above are true. ANSWER D
Date: September 19th, 2020
A major benefit to firms that rely on accounts payable as a source of short-term financing is that it can defer payment of goods and services received. A potential cost is that the firm might be foregoing discounts for early repayment. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Stage 3 of the industry life cycle is characterized by all of the following EXCEPT: A) competition intensifies as more and more firms enter the industry. B) there is little demand for the company’s products and services. C) revenues continue to grow, but at a slower pace. D) firms become more efficient at maintaining costs. […]
Date: September 19th, 2020
