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
“The Holiday Store” is a retail firm that is only open in the weeks prior to major American holidays. The rest of the year the store is closed to the public for in-store and on line sales. The store is well-managed and manages to sell a very high percentage of its inventory each holiday season. […]
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
