Which of the following is NOT a possible advantage to holding marketable securities? A) Price appreciation B) Dividends C) Interest earnings D) All of the above are potential advantages to owning marketable securities. ANSWER Answer: D
Date: September 19th, 2020
The higher the financial breakeven point and the steeper the slope of the capital structure line, the greater the financial risk. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The following information is for Auxiliary, Inc. for the month of May: cash sales of $200,000; accounts receivable payments of $200,000; accounts payable payments of $200,000; wages and salaries of $100,000; and, interest payments of $50,000. There are no other cash inflows or outflows for the month of May and its beginning monthly cash balance […]
Date: September 19th, 2020
The higher the degree of financial leverage (DFL), the greater the leverage a given financing plan has, and the steeper its slope when plotted on EBIT-EPS axes. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
We can condense the items that require cash outflow into basic categories. Which of the below is a basic category? A) Wages (but not commissions) B) Accounts receivable C) Long-term financing expenses (interest payments, dividend payments, issuing costs of debt and equity) D) All of these ANSWER Answer: C Explanation: C) We can […]
Date: September 19th, 2020
A firm has an operating profit of $300,000, interest of $35,000, and a tax rate of 40 percent. The firm has an after-tax cost of debt of 5 percent and a cost of equity of 15 percent. The firm’s target capital structure is set at a mix of 40 percent debt and 60 percent equity. […]
Date: September 19th, 2020
The public market for new speculative-grade bonds, also known as high-yield or junk bonds, was created virtually single-handedly by Michael Milken and his firm, Drexel Burnham Lambert, in the late 1970s. Prior to that time, the only corporate bonds that carried a speculative-grade rating were so-called _____, bonds that initially garnered an investment-grade rating, but […]
Date: September 19th, 2020
Firm A cash sales for the month are $200,000 and its accounts receivable payments for the month are $100,000. What is its total incoming cash flow for the month if its beginning cash for the month is $50,000 and there are no other cash inflows for the month? A) $100,000 B) $150,000 C) $300,000 D) […]
Date: September 19th, 2020
In short-term cash management as it pertains to the operations of the firm, which of the below is NOT one of the general objectives? A) Determining the cash surplus B) Determining the job satisfaction level of employees C) Determining the money the company can invest D) Determining the cash deficit ANSWER Answer: B […]
Date: September 19th, 2020
Managers in charge of short-term cash outflow direct their attention to cash management as it pertains to the operations of the firm, much as ________. A) they do with their daily cash needs B) they do with their long-term cash needs C) they do with their capital budgeting needs D) All of these […]
Date: September 19th, 2020
