Under conservative funding strategy, short-term financing is used only to finance an emergency, an unexpected outflow of funds, and the variable portion of a firm’s current assets. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
In _, an issuing firm solicits bids from among several investment banks for the job of underwriting a bond issue. a. competitive bidding b. negotiated underwriting c. aggressive bidding d. bargain bidding ANSWER A
Date: September 19th, 2020
Managers know that for cash and credit sales completed in one month that all will be recorded as sales revenue in that month, but that the actual cash flow will take place over a longer period of time because of ________. A) credit sales B) erosion C) foreclosure D) transit time ANSWER Answer: […]
Date: September 19th, 2020
Which one of the costs below is NOT a production cost? A) The wages paid to workers B) The raw materials for manufacturing products C) The dividends paid to shareholders D) The shipping costs that get the product to the customer ANSWER Answer: C Explanation: C) Production costs include, among other items, the […]
Date: September 19th, 2020
The optimal capital structure is the one that balances ________. A) return and risk factors in order to maximize profits B) return and risk factors in order to maximize earnings per share C) return and risk factors in order to maximize market value D) return and risk factors in order to maximize dividends […]
Date: September 19th, 2020
Under a conservative funding strategy, the firm funds both its seasonal and its permanent requirements with long-term debt. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The _ provision in a corporate bond contract requires the firm to retire a specified percentage of the bonds each year, typically after a deferment period of 5 to 10 years. a. sinking fund b. call c. put d. conversion ANSWER A
Date: September 19th, 2020
The ________ schedule will usually be based on the ________ forecast. A) sales; production B) production; sales C) forecast; scheduled D) production; cash ANSWER Answer: B
Date: September 19th, 2020
Beginning with a zero-leverage company, as debt is substituted for equity in the capital structure ________. A) the overall cost of capital first rises, reaches a maximum, and then declines B) the overall cost of capital declines C) the overall cost of capital first declines, reaches a minimum, and then rises D) the overall cost […]
Date: September 19th, 2020
The risk of the conservative funding requirements is low because of its high level of net working capital, and the fact that the strategy does not require a firm to use any of its limited short-term borrowing capacity. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
