Compensating balance is a checking account balance equal to a certain percentage of the amount borrowed from a bank under a line-of-credit or revolving credit agreement. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
If capital projects are mutually exclusive, which of the following statements is TRUE? A) Acceptance of one project means the firm will NOT reject the other mutually exclusive projects. B) The IRR rule still applies as a decision-making process. C) The profitability index rule will Be inconsistent with the NPV rule when choosing among mutually […]
Date: September 19th, 2020
A firm’s balance sheet is all about investing and financing and describes nothing about a firm’s operations. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Sadly, even though the author makes a strong case for using the CAPM to estimate the cost of equity, the truth is that few CFOs find the concept useful in practice. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The amount of leverage in a firm’s capital structure—the mix of long-term debt and equity maintained by the firm—can significantly affect its value by affecting return and risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
One of the most important reasons for understanding the overall economy is: A) changing economic activity will impact the current business cycle stage. B) changing economic activity will directly impact revenues. C) changing economic activity will increase profits. D) All of the above. ANSWER B
Date: September 19th, 2020
The risk-free rate is the lowest rate of interest charged by the nation’s leading banks on business loans to their most important and reliable business borrowers. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
________ occurs when a firm puts a limit on the amount of its investments. A) Capital structure B) Capital rationing C) Working capital management D) Marginal structure ANSWER B
Date: September 19th, 2020
Hurdle rates depend on the perceived riskiness of divisions or projects and are used to evaluate different types of potential investments. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
A firm’s capital structure is the mix of the current liabilities, long-term debt, and equity maintained by the firm. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
