An important aspect of insiders’ commitment to continuing ownership is the , whereby insiders agree to hold their shares for a period (typically 180 days) after the IPO date. a. ownership commitment b. signaling agreement c. statue quo agreement d. lockup provision ANSWER D
Date: September 19th, 2020
The firm’s annual financing costs of conservative financing strategy are ________. (See Table 14.1) A) $22,775 B) $26,075 C) $26,775 D) $21,175 ANSWER C
Date: September 19th, 2020
Admati and Pfleiderer (1994) argued that by having both inside and outside investors contribute to a venture, , and thus a rational continuation/termination decision would be made at each stage of development. a. both information asymmetry and principal-agent problems are resolved b. taxes and risk are both minimized c. the overinvestment and underinvestment problems are […]
Date: September 19th, 2020
A firm has an operating cycle of 170 days, an average payment period of 50 days, and an average age of inventory of 145 days. The firm’s average collection period is ________ days. A) 25 B) 75 C) 95 D) 120 ANSWER A
Date: September 19th, 2020
A firm has a cash conversion cycle of 60 days and average payment period of 40 days. The firm’s operating cycle is ________ days. A) 20 B) 100 C) 50 D) 30 ANSWER A
Date: September 19th, 2020
Which of the following is NOT considered an advantage of going public? a. Sharing corporate control with outsiders. b. Better access to both equity and debt markets in the future c. Better liquidity for the firm’s shares d. The firm’s entrepreneurs have a chance to liquidate part of their investment and diversify. ANSWER […]
Date: September 19th, 2020
Which plan has a higher degree of financial leverage and financial risk? (See Table 12.1) What will be an ideal response? ANSWER Financing Plan 2 has higher degree of financial leverage and financial risk.
Date: September 19th, 2020
A firm has an average age of inventory of 60 days, an average collection period of 45 days, and an average payment period of 30 days. The firm’s operating cycle is ________ days. A) 75 B) 105 C) 90 D) 135 ANSWER B
Date: September 19th, 2020
Which of the following elements is required for the calculation of cash conversion cycle? A) current assets ratio B) average cost of goods sold C) average collection period D) cash flows from operations ANSWER C
Date: September 19th, 2020
Harry Trading Company must choose its optimal capital structure. Currently, the firm has a 20 percent debt ratio and the firm expects to generate a dividend next year of $5.44 per share. Dividends are expected to remain at this level indefinitely. Stockholders currently require a 12.1 percent return on their investment. Harry is considering changing […]
Date: September 19th, 2020
