When a company borrows from a bank or sells bonds, it is called equity financing. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: When a company borrows from a bank or sells bonds, it is called debt financing.
Date: September 19th, 2020
A/An ________ facilitates the issuing and sale of bonds and for this service is paid a fee. A) commercial banker B) investment banker C) dealer D) broker ANSWER Answer: B
Date: September 19th, 2020
When a company “borrows” money from the owners by selling common stock or using internal funds, it is called equity financing. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
Which of the following is true of the impact of cash flows on net working capital? A) The higher the cash inflows lower is the net working capital. B) The lower the cash outflows lower is the net working capital. C) The more predictable the cash inflows of a firm, the more current assets a […]
Date: September 19th, 2020
When estimating the cost of debt financing from bonds, a firm can use the yield-to-maturity as the before-tax cost of debt. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
For which of the periods below was U.S. macroeconomic performance poorest? a. 1960-1973 b. 1974-1982 c. 1983-2000 ANSWER B
Date: September 19th, 2020
The textbook labels preferred stock as “hybrid equity financing.” Identify and explain the features of preferred stock that give it the designation of “hybrid equity financing.” What will be an ideal response? ANSWER Answer: Preferred stock is identified as a hybrid equity security because even though it is equity, it has features of […]
Date: September 19th, 2020
Conduct a DuPont ROE breakdown analysis for each firm. Which breakdown ratio is most important in explaining ROE differential between the two firms? a. profit margin b. total asset turnover c. leverage ANSWER A
Date: September 19th, 2020
The ________ is the return that the bank or bondholder demands on new borrowing. A) IRR B) WACC C) cost of equity D) cost of debt ANSWER Answer: D
Date: September 19th, 2020
The cost of debt could be which of the following? A) The required return on money borrowed as a long-term loan from a bank B) The required return on money borrowed from a venture capitalist C) The yield-to-maturity on money raised by selling bonds D) All of the choices above could be considered the cost […]
Date: September 19th, 2020
