A firm’s risk level will fluctuate as its ________ changes. A) financial leverage B) debt-to-equity C) degree of financial leverage D) All of the above. ANSWER D
Date: September 19th, 2020
While operating leverage results only in a magnification of returns, financial leverage results only in a magnification of risk. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The effective interest rate on a bank loan depends on whether interest is paid when the loan matures or in advance. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Which of the following statements are NOT true? A) Peaks in the business cycle tend to occur when the capacity-to-output gap is the largest. B) Peaks in the business cycle tend to occur when the capacity-to-output gap is the smallest. C) Troughs occur when the capacity-to-output gap is the largest. D) None of the above. […]
Date: September 19th, 2020
A firm’s capital structure combines all forms of financing on which the firm relies including: A) preferred shares. B) common equity. C) long-term debt. D) All of the above. ANSWER D
Date: September 19th, 2020
Ending cash = Sources of cash – Uses of cash + beginning cash balance Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The dollar breakeven sales level can be solved for by dividing fixed costs by the dollar contribution margin. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Managers wishing to add value to the firm can do this by adding projects with a ________ net present value. A) positive B) negative C) zero D) none of the above ANSWER A
Date: September 19th, 2020
The prime rate of interest fluctuates with changing supply-and-demand relationships for short-term funds. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
________ refers to the difficulties experienced by firms as they attempt to meet financial commitments to their creditors. A) Financial distress B) Capital structure C) Capital budgeting D) Working capital management ANSWER A
Date: September 19th, 2020
