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
Initial public offerings are more frequently issued during which stage of the industry life cycle? A) Stage 1 – start-up stage B) Stage 2 – rapid growth and little competition stage C) Stage 3 – intense competition stage D) Stage 4 – stabilization and maturity stage ANSWER B
Date: September 19th, 2020
Revolving credit agreements are non-guaranteed loans that specify the minimum amount that a firm can owe the bank at any point in time. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Flyover Airlines Inc. has a cost of equity equal to 24.67%. If the firm is financed with 40% debt and 60% equity and has an average cost of capital of 18%, what is the cost of debt? Assume perfect capital markets. A) 8.00% B) 6.67% C) 10.00% D) 12.33% ANSWER A Explanation: A) […]
Date: September 19th, 2020
Generally, increases in leverage result in ________ return and ________ risk. A) decreased; increased B) decreased; decreased C) increased; increased D) increased; decreased ANSWER C
Date: September 19th, 2020
An interesting fact about commerce in America is that we tend to see very few differences in the age of accounts receivable across industries. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
