With regard to financing through the issuance of stock, which of the following is true? A....
With regard to financing through the issuance of stock, which of the following is true?
A. Common stocks carry a fixed maturity date at which point they need to be paid.
B. ssuing common stock can help raise new capital but it adversely effects the company's bond rating
C.There is no fixed cost associated with issuing stock.
D. It is always easier to sell common stock than any other asset or investment (e.g., a bond).
E. None of these
Homework Answers
A is not true. Common stocks do not have a fixed maturity date, unlike bonds
B is not true. Issuing common stock decreases the financial leverage, and usually improves the company's bond rating
C is true. There is no fixed cost with issuing stock, unlike bonds
D is not true. It is not always easier to sell common stock. Selling bonds is usually easier
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With regard to financing through the issuance of stock, which of
the following is true?
A....
An investment amount of $10M has to be raised through equity financing and debt financing. The...
An investment amount of $10M has to be raised through equity
financing and debt financing. The required debt ratio is 0.40 and
the company tax rate is 35%.
a) The current market price of the company’s common stock is $50
and the current dividend is $5
and the dividend is expected to grow at 5% annual rate. The
floating cost of issuing a common stock is 10%. Preferred stocks of
$100 par value with 10% fixed annual dividend can also...
Regarding the issuance of stock, which of the following statements is incorrect? O A. The issue...
Regarding the issuance of stock, which of the following statements is incorrect? O A. The issue price is the amount the corporation receives from issuing its stock, OB. A company can sell its stock directly to stockholders, or it can use the services of the state's Securities and Exchange Commission O C. Large corporations cannot finance all their operations through borrowing, so they raise capital by issuing stock. OD. Large corporations need huge quantities of money,
1. Which of the following variables does NOT affect the value of a stock option? The...
1. Which of the following variables does NOT affect the value of a stock option? The predicted future price of the underlying stock The current price of the underlying stock The option’s time to maturity The option’s strike price The interest rate 2. Zack owns a bond that will pay him $35 each year in interest plus a $1,000 principal payment at maturity. The $1,000 principal payment is called the coupon. par value. discount. yield. call premium. None of the...
26. Which of the following would not be a cash flow from financing activities? A) Issuance...
26. Which of the following would not be a cash flow from financing activities? A) Issuance of common stock. B) Borrowing on a long-term note payable. C) Collection of a cash dividend. D) Repayment of principal on a long-term note payable. E) None of the above is correct.
20. Which of the following represent cash inflows from financing activities? A) Issuing stock in exchange...
20. Which of the following represent cash inflows from financing activities? A) Issuing stock in exchange for another company's shares. B) Paying a bond's face value at maturity. C) Issuing long-term bonds at a discount. D) Receiving interest on promissory notes.
Identify each of the following activities as operating, investing, or financing, A. Issuance of common stock...
Identify each of the following activities as operating, investing, or financing, A. Issuance of common stock - Fincang B. Sale of merchandise inventory - bertentoons C. Payment of employee salary D. Deposition of equipment to manufacture a company's products E. Investment in the shares of another company Determine the
Which of the following is a role the investment bank takes on during the bond issuance...
Which of the following is a role the investment bank takes on during the bond issuance process? Choosing the bond's par value. Pricing the bond. Telling the firm whether it should issue stocks or bonds to raise capital. None of the above Question 4 (5.5 points) TRACE did not reduce bond trading costs as much as expected by regulators. True False
TRUE OR FALSE Payroll tax expense for businesses consists of FICA tax, federal unemployment tax, and...
TRUE OR FALSE Payroll tax expense for businesses consists of FICA tax, federal unemployment tax, and state unemployment tax. A disadvantage of bond financing is that issuing bonds dilutes (reduces) owners’ equity. A bond's par value is not necessarily the same as its market value. A premium on bonds occurs when bonds carry a contract rate greater than the market rate at issuance. A corporation is a separate legal entity from its owners. In a corporation, authorized stock can be...
ASsignment 20O-Hybria Fnancing-Preierred Stock, Wartants, and convertibies Just like any financing security, convertibles have certain advantages and disadvantages Based on your understanding of...
ASsignment 20O-Hybria Fnancing-Preierred Stock, Wartants, and convertibies Just like any financing security, convertibles have certain advantages and disadvantages Based on your understanding of using convertibles for financing, identify whether each of the features listed in the following table is an advantage or a disadvantage from an issuer's standpoint: Advantage Disadvantage Feature Convertibles allow investors to buy the company's shares at a certain strike price. Conversion usually takes place when the company's share price increases beyond the strike price. Convertible securities...
19. Which of the following represent cash outflows from financing activities? A) Distributing a stock dividend....
19. Which of the following represent cash outflows from financing activities? A) Distributing a stock dividend. B) Paying a bond's face value at maturity. C) Issuing long-term bonds at a discount. D) Paying interest on promissory notes.
An investment amount of $10M has to be raised through equity
financing and debt financing. The required debt ratio is 0.40 and
the company tax rate is 35%.
a) The current market price of the company’s common stock is $50
and the current dividend is $5
and the dividend is expected to grow at 5% annual rate. The
floating cost of issuing a common stock is 10%. Preferred stocks of
$100 par value with 10% fixed annual dividend can also...
Regarding the issuance of stock, which of the following statements is incorrect? O A. The issue price is the amount the corporation receives from issuing its stock, OB. A company can sell its stock directly to stockholders, or it can use the services of the state's Securities and Exchange Commission O C. Large corporations cannot finance all their operations through borrowing, so they raise capital by issuing stock. OD. Large corporations need huge quantities of money,
26. Which of the following would not be a cash flow from financing activities? A) Issuance of common stock. B) Borrowing on a long-term note payable. C) Collection of a cash dividend. D) Repayment of principal on a long-term note payable. E) None of the above is correct.
20. Which of the following represent cash inflows from financing activities? A) Issuing stock in exchange for another company's shares. B) Paying a bond's face value at maturity. C) Issuing long-term bonds at a discount. D) Receiving interest on promissory notes.
Identify each of the following activities as operating, investing, or financing, A. Issuance of common stock - Fincang B. Sale of merchandise inventory - bertentoons C. Payment of employee salary D. Deposition of equipment to manufacture a company's products E. Investment in the shares of another company Determine the
Which of the following is a role the investment bank takes on during the bond issuance process? Choosing the bond's par value. Pricing the bond. Telling the firm whether it should issue stocks or bonds to raise capital. None of the above Question 4 (5.5 points) TRACE did not reduce bond trading costs as much as expected by regulators. True False
ASsignment 20O-Hybria Fnancing-Preierred Stock, Wartants, and convertibies Just like any financing security, convertibles have certain advantages and disadvantages Based on your understanding of using convertibles for financing, identify whether each of the features listed in the following table is an advantage or a disadvantage from an issuer's standpoint: Advantage Disadvantage Feature Convertibles allow investors to buy the company's shares at a certain strike price. Conversion usually takes place when the company's share price increases beyond the strike price. Convertible securities...
19. Which of the following represent cash outflows from financing activities? A) Distributing a stock dividend. B) Paying a bond's face value at maturity. C) Issuing long-term bonds at a discount. D) Paying interest on promissory notes.
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