Diamond Electronics Inc. has a current price of $18.45 per share for its preferred shares that pay an annual dividend of $0.96. What is the current return on the firm’s preferred shares? A) 5.20% B) 19.22% C) 8.74% D) There is not enough information to answer this question. ANSWER A Explanation: A) r […]
Date: September 19th, 2020
Spontaneous unsecured financing has a specific interest cost associated with it that can be at a fixed or floating rate. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
By calling the additional dividend an extra dividend, a firm avoids setting expectations that the dividend increase will be permanent. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Use the information in Table 4.1 to determine the 2013 dividend payout ratio for Bacon Signs. A) This question cannot be answered from the information provided. B) $250/$7418 = 0.03 C) $463/$713 = 0.65 D) $250/$713 = 0.35 ANSWER D Explanation: D) DPO Ratio = (Div)/NI = $250/$713 = 0.35
Date: September 19th, 2020
In credit terms, EOM (End-of-Month) indicates that the accounts payable must be paid by the end of the month in which the merchandise has been purchased. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
Notes payable are either spontaneous secured or spontaneous unsecured financing and result from the normal operations of a firm. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
ROE is an important benchmark because it indicates the overall profits of a firm for a particular period relative to the shareholders’ investment in the firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The ________ method of capital budgeting finds the present value of cash inflows and subtracts the initial cash outflow. A) payback B) net present value C) internal rate of return D) modified internal rate of return ANSWER B
Date: September 19th, 2020
What is the logic behind using just one cost of debt financing rather than estimating the cost of financing with each specific issue of long and short-term debt? What will be an ideal response? ANSWER The logic behind using just one rate–a long-term yield–for both short-term and long-term debt is that while short-term […]
Date: September 19th, 2020
Regular dividend policy is a dividend policy based on the payment of a certain fixed percentage of earnings to owners in each dividend period. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
