100% (15 out of 15 correct) | Responses to questions are indicated by the symbol. | | | 1. | An SSU’s A. | income and expenditures for the period are equal. | B. | income for the period exceeds expenditures. | C. | expenditures for the period exceed receipts. | D. | spending is entirely financed by credit cards | A surplus position is when income for the period exceeds planned expenditures. (see page 7). | | 2. | Which of the following is an example of indirect financing
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Source of finance Match the source with advantages and disadvantages State if advantage/disadvnatage ordinary share capital: money given to a company by shareholders in return for a share certificate‚ which gives them part ownership of the company and entitles them to a share of the profits 21.Increasing ordinary share capital can make it easier to borrow more funds from a bank as the share capital can purchase assets that can be used as collateral. advantage 22.Bringing new shareholders
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CHAPTER 9 THE COST OF CAPITAL (Difficulty: E = Easy‚ M = Medium‚ and T = Tough) Multiple Choice: Conceptual Easy: Capital components Answer: c Diff: E [i]. Which of the following is not considered a capital component for the purpose of calculating the weighted average cost of capital (WACC) as it applies to capital budgeting? a. Long-term debt. b. Common stock. c. Accounts payable and accruals. d. Preferred stock. Capital components Answer: d
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Integrative—WACC‚ WMCC‚ and IOS. Cartwell Products has compiled the data shown in the following table for the current costs of its three basic sources of capital—long-term debt‚ preferred stock‚ and common stock equity—for various ranges of new financing. Source of Capital Range of New Financing After Tax Cost Long-term debt $0 to 320‚000 6% $320‚000 and above 8% Preferred stock $0 and above 17% Common stock equity $0 to $200‚000 20% $200‚000 and above 24%
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Chapter 22: Dividend Policy Multiple Choice Questions 1. When is the ex-dividend date if the holder of record date is April 14‚ 2006? A. April 15 B. April 16 C. April 12 D. April 13 Level of difficulty: Medium Solution: C Ex-dividend date is the second business date before the holder of record date. 2. Which of the following statements about M&M assumptions is false? A. There are no taxes. B. Not all firms maximize value. C. There is no debt. D. Markets are perfect. Level of difficulty:
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Part I – Perfect capital markets‚ capital structure and cost of capital (15 points) GP Corp. has common stock with a market value of $200 million and riskless debt with a value of $100 million. Investors expect a 15% return on the stock and a 6% return on the debt. Assume perfect capital markets without any taxes. a) Suppose GP issues $100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction? (4 points) b) Suppose instead GP issues $50 million
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Managing Finances for a Better Future In American society‚ we are encouraged to save money for a better future. However‚ in my life I have encountered problems with managing my personal finances. In the past‚ I spent my money irresponsibly. Despite making a decent salary‚ it was a challenge trying to maintain my financial responsibilities and not something I was very concerned about. I felt as though I was living paycheck to paycheck‚ when the reality was I simply did a poor job of
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Chapter 9. Risk and resturn: lessons from market history Two forms of return on investment in shares: 1. Dividend. When a company is profitable‚ some of the profit is divided amongst the shareholders. This part is the income component of your return. 2. Capital gain/loss. This is the initial worth of the equity minus the end-of-year worth of the equity. This is the second component of your return.(also reffered to a negativ/positive CG) The total monetary return is the sum of the
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paradigm that has dominated educational technology and educational development since the 1970 ’s - the systems approach. It begins by looking at how educational technology evolved from the ’technology in education ’ model on which it was originally based to the current ’technology of education ’ model - a model that is founded on general systems theory. It then introduces some of the basic concepts that underlie the systems approach‚ and presents a simple‚ highly practical model that can be used
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Final Examination Paper BUSI570 Managerial Finance Prepared by: nansla Columbia College 3 December 2012 Topic 2: What affect does inflation have on bond prices or interest rates for new or existing bonds? The price of bonds on the market can be either higher or lower than the face value of the bond depending on the current economic condition or the market condition‚ which can affect the price investors are willing to pay (Fidelity Investments‚ 2012). In regard to price‚ the bond prices
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