Standard debt provisions specify certain record keeping and general business practices that must be ensured by the bond issuer. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A firm’s flotation cost can be calculated by weighting the cost of each source of financing by its relative proportion in a firm’s target capital structure. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
The cost of capital is a static concept and it is not affected by economic and firm-specific factors such as business risk and financial risk. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
A trustee is a paid party representing the bond issuer in the bond indenture. Indicate whether the statement is true or false ANSWER FALSE
Date: September 19th, 2020
In ratio analysis, a comparison to a standard industry ratio is made to isolate ________ deviations from the norm. A) greater than average B) negative C) marginal D) standard ANSWER B
Date: September 19th, 2020
The cost of capital is the rate of return a firm must earn on investments in order to increase the firm’s value. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
Restrictive covenants, coupled with standard debt provisions, help the lender to monitor the borrower’s activities to ensure efficient use of funds. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
The cost of capital is used to decide whether a proposed corporate investment will increase or decrease a firm’s stock price. Indicate whether the statement is true or false ANSWER TRUE
Date: September 19th, 2020
An analyst should be careful when conducting ratio analysis to ensure that ________. A) the overall performance of a firm is not judged on a single ratio B) the role of inflation is ignored C) ratios being compared should be calculated using financial statements dated at different points in time during the year D) different […]
Date: September 19th, 2020
Which of the following is true of benchmarking? A) It is an analysis in which a firm’s ratio values are analyzed to project the fundamental values of the assets for upcoming years or business cycle. B) It is an analysis in which a firm’s ratio values are compared with those of a key competitor or […]
Date: September 19th, 2020
