Which of the following are fundamental concepts that nonfinancial managers need to understand? A) How current business conditions can affect the firm’s performance. B) How to project financial statements and future investment needs. C) How capital markets work to raise long-term capital. D) All of the above. ANSWER D
Which of the following is an advantage of using private placements for debt? A) fewer and less burdensome restrictive covenants B) reduced costs from the elimination of the registration statement for the SEC, investment-banking underwriting fees and distribution costs C) lower interest costs D) the possibility of future SEC registration ANSWER B
Tina purchased a personal umbrella policy with a $1 million limit. Her insurer required her to carry liability limits of 250/500/50 under her auto insurance policy. The personal umbrella policy was written with a $1,000 self-insured retention. Tina was responsible for an auto accident in which the other driver was severely injured. The other driver’s […]
Len is considering the purchase of a home. As a home is a large investment, Len wants to make sure that there are no liens, easements, or other encumbrances preventing him from an unchallenged right to possess and enjoy his property. Len can protect this right through the purchase of A) extended coverage insurance. B) […]
Based on the information in Table 4-1, the accounts receivable turnover is A) 10.00. B) 9.50. C) 8.11. D) 11.11. ANSWER D
The procedure by which significant changes may be made to a partnership, such as admission of a new partner or termination of the partnership, are governed by each state so no partnership agreement is needed. Indicate whether the statement is true or false ANSWER FALSE
Martin would like to insure valuable personal property limited in coverage by his homeowners policy. Martin has two options. He can purchase the coverage through a separate personal articles floater policy or he can add an endorsement to his homeowners policy. The endorsement is called the A) extended coverage endorsement. B) scheduled personal property endorsement. […]
D’Anthony borrowed $50,000 today that he must repay in 15 annual end-of-year installments of $5,000. What annual interest rate is D’Anthony paying on his loan? A) 5.556% B) 33.33% C) 2.222% D) 3.333% ANSWER A
Carolyn is considering the purchase of a large (60-foot) boat. She called her insurance agent to see if she needs a separate policy for the boat. The agent said that a special category of insurance policies was designed to insure large watercraft. These policies are called A) yacht insurance policies. B) flood insurance policies. C) […]
Calculate an EBIT break-even between a debt firm (DF) and an all-equity firm (EF) based on the following information: DF interest = $60,000, DF number common shares = 5,000, EF number of common shares = 12,000, and tax rate = 40 percent. A) EBIT = $234,547 and EPS = 10.35 B) EBIT = $146,312 and […]