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 amount and timing of sales are usually provided by the ________ department. A) advertising or finance B) accounting or sales C) sales or marketing D) marketing or planning c ANSWER Answer: C
Date: September 19th, 2020
We start the process of building a cash forecast with predicting the cash inflow from future sales. This is called ________. A) a sales forecast B) a cash forecast C) a monetary forecast D) an expense forecast ANSWER Answer: A
Date: September 19th, 2020
In theory, a firm’s optimal capital structure is that which minimized the firm’s overall cost of capital resulting in a maximization of the market value of a firm. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Bond contracts generally include restrictive covenants, designed to protect the interests of the bondholders. Typical covenants restrict all of the following EXCEPT: a. the borrowing firm’s investment activities. b. the borrowing firm’s ability to issue additional debt. c. the borrowing firm’s dividend policy. d. the firm’s hiring of management personnel. ANSWER D
Date: September 19th, 2020
The aggressive funding strategy is risky due to its minimum level of net working capital, high dependency on short-term sources of funds, and the changing short-term interest. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The amount of sales a company predicts is a function of two types of data. Which of the types below is one of these two types? A) Accounting data B) Internal data C) Rationing data D) Legal data ANSWER Answer: B Explanation: B) The amount of sales a company predicts is a function […]
Date: September 19th, 2020
