An increase in the current liabilities to total assets ratio will result in ________. A) an increase in risk B) a decrease in risk C) an increase in profit D) a decrease in profit ANSWER A
Date: September 19th, 2020
Over the years 1980-2000, most U.S. firms that have gone public have chosen the __ as their listing market. a. NYSE b. AMEX c. NASDAQ/OTC d. Bulletin Board ANSWER C
Date: September 19th, 2020
Which of the following is NOT generally considered a cost of going public? a. Underpricing: IPOs appear to be substantially underpriced. b. Competition: Now that the firm is more visible, industry rivals will compete more intensively. c. Issuance Costs: The typical underwriter spread for an IPO is 7% of the offering proceeds. d. Management’s time […]
Date: September 19th, 2020
Other factors remaining constant, an increase in the average payment period will result in ________. A) a decrease in the average collection period B) a decrease in the cash conversion cycle C) an increase in the cash conversion cycle D) an increase in the average collection period ANSWER B
Date: September 19th, 2020
One way to improve the cash conversion cycle is to ________. A) speed up collections B) slow down credit approvals C) slow down inventory turnover D) speed up payments ANSWER A
Date: September 19th, 2020
The reason why maximizing share value and maximizing EPS do not give the same optimal capital structure is because ________. A) EPS maximization does not consider risk B) share value maximization does not consider risk C) EPS maximization considers cash flows D) EPS maximization does consider risk ANSWER A
Date: September 19th, 2020
A firm with highly unpredictable sales revenue would best choose ________ funding strategy to minimize risk. A) the aggressive B) the conservative C) the trade-off D) a seasonal ANSWER B
Date: September 19th, 2020
Tangshan Mining Company must choose its optimal capital structure. Currently, the firm has a 40 percent debt ratio and the firm expects to generate a dividend next year of $4.89 per share and dividends are expected to grow at a constant rate of 5 percent for the foreseeable future. Stockholders currently require a 10.89 percent […]
Date: September 19th, 2020
The basic shortcoming of the EBIT-EPS approach to capital structure is ________. A) that the optimal capital structure is difficult to compute B) its disregard for the presence of preferred stock in the capital structure C) its disregard for the firm’s dividend policy D) that it concentrates on the maximization of EPS rather than the […]
Date: September 19th, 2020
Gompers (1996) argued that smaller, younger VCs often bring their firms public earlier in order to establish a reputation and therefore attract additional capital in the future. He refers to such self-serving behavior on the part of a VC as a. grandstanding. b. boasting. c. reputation building. d. repugnant. ANSWER A
Date: September 19th, 2020
