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
Modigliani and Miller (M&M) proposed a model in which, given certain restrictive assumptions, the capital structure of a firm does not impact the value of the firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ analysis is a technique used to assess the returns associated with various cost structures and levels of sales. A) Time-series B) Marginal C) Breakeven D) Ratio ANSWER C
Date: September 19th, 2020
The average working capital gap seems to differ across industries in the United States. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Under conditions of perfect capital markets, M&M suggest that the average cost of capital for the firm will increase with the addition of debt. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Because the bank guarantees the availability of funds, a commitment fee is normally charged on a simple line of credit agreement. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Bond yields move inversely to bond price changes. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
