Homework Answers
Sinking fund provision requires the firm to set aside an amount of money to trust periodically for the retirement of its preferred stock or the maturity of its bond.
This fund is raised and set aside by firms and companies for over a particular period of time & to use this fund in future for meeting capital expenses, repayment of long term debts etc.
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Question 12 ) requires the firm to set aside an amount of money to trust periodically...
Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investme...
Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment a bond fund and 2) a stock fund. The pro ected returns over the life of the invest ents are 9% or the bond fund and 11%, forthe stock options: 1 nd. hate er portion of the inheritance he finally decides to commit...
1st blank options = par value, coupon payment, price 2nd blank options = bankruptcy, default, liquidation...
1st blank options = par value, coupon payment, price
2nd blank options = bankruptcy, default, liquidation
3rd blank options = convertible provision, sinking fund
provision, call provision
4th blank options= call provision, call premium,
convertibility provision
5th blank options = floating-rate, fixed-rate
6th blank options = indenture, trustee, debenture
7th = multiple choice
1. Characteristics of bonds To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond's_ par...
Company set aside a certain amount of money to pay off a two-year long term loan....
Company set aside a certain amount of money to pay off a two-year long term loan. these cash are thus restricted. under which section of the balance sheet is this ‘cash restricted for future loan payment’ reported? Current assests b. non-current assets current liabilities stockholders equity I COULDNT SEE THE WHOLE QUESTIONS SO SOME WORDS MAY NOT MAKE SENSE BUT ITS THE OVERALL IDEA OF THE QUESTION
Term Answer Description Coupon A. This term is used to define the provision which allows the...
Term Answer Description Coupon A. This term is used to define the provision which allows the bond issuer to settle the payments towards the bond before the maturity. 0 B. Equipment Trust Certificate Sinking Fund 0 C. This term is used to state the quoted value of a bond but does not include the value of any accrued interest that bondholders would eam. This term defines the number of shares of common stock that a bondholder will receive when they...
Name Date Principles of Finance Chapters 1 & 2 Week 6 11. Which of the following...
Name Date Principles of Finance Chapters 1 & 2 Week 6 11. Which of the following statements is correct? a. A warrant is basically a long-term option that enables the holder to sell common stock back to the firm at an agreed upon price, at a specified time in the future. b. Generally, warrants are distributed along with preferred stock in order to make the preferred stock less risky. c. If a company issuing coupon paying debt wanted to reduce...
of $2,500, and a profit margin of 5 percent. 1. Braam Fire The firm has "Fire...
of $2,500, and a profit margin of 5 percent. 1. Braam Fire The firm has "Fire Prevention Corp, has sales of $3,000, total assets of $2,500 has a total debt ratio of 40 percent. What is the return on equity? A. 2.4 percent B. 8.4 percent C. 10 percent D. 12 percent E. 15 percent 54 dividends per share next year. The market requires a dividends grow at a constant rate of 6% 2. The Blue Moor 16% return on...
Question 5 The common stockholders have the right to _____. Answers: vote for the changes in...
Question 5 The common stockholders have the right to _____. Answers: vote for the changes in the firm's charter convert their stock into a bond receive the cash distributions before the preferred stockholders determine the market value of their share receive cumulative dividends Question 6 Investors with a _____ will demand a higher rate of return. Answers: higher time preference for consumption lower exposure to economic risks lower access to production opportunities higher financial creditworthiness lower default premium Question 7...
questions 9-12 please 9. If a firm increases its plowback ratio, this will probably result in...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
Exercise 17-1 Classify the following investments. Each case is independent of the other. Investm (a) A...
Exercise 17-1 Classify the following investments. Each case is independent of the other. Investm (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold, (b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock (c) Bonds were purchased in December of this...
Problem Set Ps5-3 12. Which statement is true conceming off-balance sheet financing? a. It allows a...
Problem Set Ps5-3 12. Which statement is true conceming off-balance sheet financing? a. It allows a company to overstate its debt to assets ratio. b. It is an intentional effort by a company to structure its financing arrangements to avoid showing liabilities on its balance sheet. C. It is a violation of GAAP and causes total liabilities to be understated. d. It occurs when companies report liabilities on the income statement as expenses rather than liabilities on the balance sheet....
Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment a bond fund and 2) a stock fund. The pro ected returns over the life of the invest ents are 9% or the bond fund and 11%, forthe stock options: 1 nd. hate er portion of the inheritance he finally decides to commit...
1st blank options = par value, coupon payment, price
2nd blank options = bankruptcy, default, liquidation
3rd blank options = convertible provision, sinking fund
provision, call provision
4th blank options= call provision, call premium,
convertibility provision
5th blank options = floating-rate, fixed-rate
6th blank options = indenture, trustee, debenture
7th = multiple choice
1. Characteristics of bonds To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential. For example: • A bond's_ par...
Term Answer Description Coupon A. This term is used to define the provision which allows the bond issuer to settle the payments towards the bond before the maturity. 0 B. Equipment Trust Certificate Sinking Fund 0 C. This term is used to state the quoted value of a bond but does not include the value of any accrued interest that bondholders would eam. This term defines the number of shares of common stock that a bondholder will receive when they...
Name Date Principles of Finance Chapters 1 & 2 Week 6 11. Which of the following statements is correct? a. A warrant is basically a long-term option that enables the holder to sell common stock back to the firm at an agreed upon price, at a specified time in the future. b. Generally, warrants are distributed along with preferred stock in order to make the preferred stock less risky. c. If a company issuing coupon paying debt wanted to reduce...
of $2,500, and a profit margin of 5 percent. 1. Braam Fire The firm has "Fire Prevention Corp, has sales of $3,000, total assets of $2,500 has a total debt ratio of 40 percent. What is the return on equity? A. 2.4 percent B. 8.4 percent C. 10 percent D. 12 percent E. 15 percent 54 dividends per share next year. The market requires a dividends grow at a constant rate of 6% 2. The Blue Moor 16% return on...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
Exercise 17-1 Classify the following investments. Each case is independent of the other. Investm (a) A bond that will mature in 4 years was bought 1 month ago when the price dropped. As soon as the value increases, which is expected next month, it will be sold, (b) 10% of the outstanding stock of Farm-Co was purchased. The company is planning on eventually getting a total of 30% of its outstanding stock (c) Bonds were purchased in December of this...
Problem Set Ps5-3 12. Which statement is true conceming off-balance sheet financing? a. It allows a company to overstate its debt to assets ratio. b. It is an intentional effort by a company to structure its financing arrangements to avoid showing liabilities on its balance sheet. C. It is a violation of GAAP and causes total liabilities to be understated. d. It occurs when companies report liabilities on the income statement as expenses rather than liabilities on the balance sheet....
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