On Friday, January 4, Oceanic Airlines declared a $0.75 per share dividend to be paid on Monday, March 11; the date of record will be Friday, February 15. What is Oceanic’s ex-dividend date? A) Monday B) Tuesday C) Wednesday D) Thursday E) Friday ANSWER C
Date: September 19th, 2020
What is the name of the contract where corporations, institutional investors, and individuals are required to pay or to receive a specific amount of foreign currency at a specific exchange rate at a particular date in the future? A) forward foreign exchange market B) forward currency contract C) forward rate contract D) future hedge contract […]
Date: September 19th, 2020
When agency and bankruptcy costs are considered, the optimal capital structure has a debt level where A) bankruptcy costs are maximized. B) the debt/equity ratio is 2:1. C) the cost of equity equals zero. D) the cost of debt equals the cost of equity. E) the sum of agency and bankruptcy costs equal the benefits […]
Date: September 19th, 2020
Pensacola Soda Inc is all equity financed and generates perpetual annual EBIT of $300. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Pensacola has a 100% payout rate, 1,500 shares outstanding, and that shareholders require a return […]
Date: September 19th, 2020
Halo Corp is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Halo has a 100% payout rate. Halo has 1,000 shares outstanding. The stock holders of Halo […]
Date: September 19th, 2020
Amish Electronics Inc is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Amish has a 100% payout rate, 5,000 shares outstanding, and that shareholders require a return […]
Date: September 19th, 2020
Which of the following statements about debt is false? I. Interest payments reduce the scope for waste by management. II. Debt creates the possibility of bankruptcy. III. Debt increases the tendency of shareholders to take gambles. IV. Debt reduces the cash flows that go to government. A) I B) II C) III D) IV E) […]
Date: September 19th, 2020
Treadless Tires Inc is currently all equity financed. It used to be leveraged, but it recently issued 20,000 new shares at $25 per share. The proceeds from the new issue were used to repay all of its debt. Financial details for the current and old capital structures are presented in the table below. Assume that […]
Date: September 19th, 2020
Jungle Cat Petting Zoo Inc is currently all equity financed. It used to be leveraged, but it recently issued 5,000 new shares at $50 per share. The proceeds from the new issue were used to repay all of its debt. Financial details for the current and old capital structures are presented in the table below. […]
Date: September 19th, 2020
Parker’s Barbecue Inc operates a chain of restaurants in the south eastern United States. Parker’s is currently levered. It used to be all-equity, but it recently borrowed and used the money to repurchase 30,000 shares. Financial details for the current and old capital structures are presented in the table below. Assume that Parker’s generates perpetual […]
Date: September 19th, 2020
