The ________ from the sale of a security are the funds actually received from the sale after ________. A) gross proceeds; adding the after-tax costs B) gross proceeds; reducing the flotation costs C) net proceeds; reducing the flotation costs D) net proceeds; adding the after-tax costs ANSWER C
Date: September 19th, 2020
From a bond issuer’s perspective, the IRR on a bond’s cash flows is its yield to maturity (YTM); from the investor’s perspective, the IRR on a bond’s cash flows is the cost to maturity. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
To compensate for the uncertainty of future interest rates and the fact that the longer the term of a loan the higher the probability that the borrower will default, the lender typically ________. A) charges a higher interest rate on long-term loans B) reserves the right to change the terms of the loan at any […]
Date: September 19th, 2020
A firm has a current ratio of 1; in order to improve its liquidity ratios, this firm might ________. A) improve its collection practices by providing extended credit policy B) improve its collection practices and pay accounts payable, thereby decreasing current liabilities and decreasing the current and quick ratios C) decrease current liabilities by utilizing […]
Date: September 19th, 2020
The approximate before-tax cost of debt for a 15-year, 10 percent, $1,000 par value bond selling at $950 is ________. A) 10 percent B) 10.7 percent C) 12 percent D) 15.4 percent ANSWER B
Date: September 19th, 2020
________ means that subsequent creditors agree to wait until all claims of the are senior debt satisfied before having their claims satisfied. A) Security interest B) Subordination C) Sinking fund requirement D) Bond indenture ANSWER B
Date: September 19th, 2020
________ may indicate a firm is experiencing stockouts and lost sales. A) Average payment period B) Inventory turnover ratio C) Average collection period D) Quick ANSWER B
Date: September 19th, 2020
The cost to maturity of existing bonds reflects the rate of return required by the market. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
If the only information you are given about Ryan Corporation, a large public company in business for many years, is that it has a current ratio of 2.9, what could you infer from this? A) It can meet the short-term obligations without any difficulty. B) You could determine that Ryan has a liquidity problem because […]
Date: September 19th, 2020
The purpose of the restrictive debt covenant that limits the distribution of profits to shareholders is to ________. A) assure the lender that additional borrowing is constrained or may be subordinated to the original loan B) limit the amount of fixed-payment obligations C) ensure a cash shortage does not cause an inability to meet current […]
Date: September 19th, 2020
