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Question(s) / Instruction(s):

1. Money market instruments include:
a)bankers acceptances
b)preferred stock
c)coprporate bonds
d)comon stock

2. Capital market instruments include:
a)negotiable certificates of deposit
b)corporate equities
c)commercial paoer
d)treasury bills

3. When public corporations decide to raise cash in capital markets,
what type of financing vehicle is most favorde?
a)retained earnings
b)preferred stock
c)common stock
d)corporate bonds

4. Which of the following relationships is true, regarding the costs
of issuing the below securities?
a)common stock>bonds>preferred stock
b)preferred stock>common stock>bonds
c)bonds>common stock>preferred stock
d)common stock>preferred stock>bonds

5. According to the SEC the correct sequence of events for a security
issue is:
a)red herring, final prospectus, SEC registration
b)SEC registration, reed herring, final prospectus
c)final prospectus, SEC registration, red herring
d)red herring, SEC registration, final prospectus

6. Organized security exchanges provide which of the following
a)continuous market
b)established and publicized fair security prices
c)help businesses raise new capital
d)all of the above

7)Basic tools of capital-structure management include:
a)EBIT-EPS analysis
b)comparative profitiblity ratios
c)capital budgeting techniques
d)none of the above

8. According to the perfect markets approach to dividend policy:
a)other things equal, the greater the payout ratio, the greater the
share price of the firm
b)the price of a share of stock is not affected by dividend policy
c)the firm should retain earnings so stockholders will receive capital
d)the firmshould pay a dividend only after current equity financing
needs have been met

9. Which of the following dividend policies will cause dividends per
share to fluctuate the most?
a)constant dividend payout ratio
b)stable dollar dividend
c)small, low, regular dividend plus a year-end extra
d)none of the above

10. Some key determinants of dividend policy are:
a)legal restrictions
b)liquidity position
c)earnings predicability
d)all of the above

11. The final approval of a dividend payment comes from:
a)the controller
b)the president of the company
c)the board of directors
d)it is a joint decision requiring approval from all of the above

12. Assume that on January 1, a firm announces that on June 30 they
will pay a dividend of $2.50 per share to holders of record on March
30. When does the stock sell ex-dividend?
a)January 5
b)April 5
C)March 26
d)July 5
e)June 25

13. With which of the following is current asset management primarily
a)with property, plant and equipment acquisition
b)with cash, accounts receivable and inventory levels
c)with investments in marketable securities
d)accounts payable and accrued expenses

14. Once a cah discount period has passed:
a) one should pay immediately
b)there is no financial incentive to pay before the fianl due date
c)one should pay after the final due date
d)cannot be determined from the information

15. Unsecured short-term credit is characterized by:
a)one year or less maturity
b)low cost collateral
c)a maturity of more than one year
d)high rate of return

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