Financial theory suggests and empirical evidence supports the idea that firms have a”pecking order” by which they choose to raise funds to finance assets. From the first source of financing to the last this pecking order is: A) internally generated funds, debt, and new equity. B) debt, internally generated funds, and equity. C) equity, debt, […]
Probate costs are associated with the validation of your will and the transfer of your estate. Indicate whether the statement is true or false ANSWER TRUE
Rogue River Retail Inc. has a before-tax cost of debt of 8.00%, a cost of equity of 12.00%, a tax rate of 30.00% and no preferred stock outstanding. If the firm is made up of 50% debt and 50% equity, what is the firm’s after-tax cost of borrowing? A) 12.00% B) 11.60% C) 8.00% D) […]
With 100/300/10 split auto liability limits, the maximum payout for property damage is A) $10,000. B) $100,000. C) $300,000. D) $450,000. ANSWER A
Marvelous at the Mall Inc. has a before-tax cost of debt of 8.00%, but the risk-free rate is only 3.00%. If the market risk premium for equity is 6.00% and the firm has a beta of 1.25, what is the required return on equity for the firm? A) 10.50% B) 11.00% C) 11.50% D) 12.00% […]
Cash balance plans tend to favor more mobile younger workers. Indicate whether the statement is true or false ANSWER TRUE
In several states requiring no-fault insurance, A) you are not required to carry personal injury protection. B) you may sue for physical injuries only if your damages are above either a monetary or verbal threshold defined in state law. C) you may sue only for recovery of the deductible on your no-fault policy. D) no-fault […]
A firm cannot buy back stock AND increase dividends at the same time. Indicate whether the statement is true or false ANSWER FALSE
Under an Point of Service HMO A) all employees must enroll after a preliminary waiting period. B) all employees may enroll after a preliminary waiting period. C) you may select non-HMO providers if you are willing to incur additional costs. D) you may select non-HMO providers at no additional cost. ANSWER C
Taxes on the death estate are known as probate costs. Indicate whether the statement is true or false ANSWER FALSE
