1. A_____ is an action taken by a firm to decrease the per-share price of its...
1. A_____ is an action taken by a firm to decrease the per-share price of its stock.
A.
stock appreciation
B.
stock split
C.
stock issue
D.
stock repurchase
E.
stock redemption
2. Which of the following leads to less business risks compared to other factors?
A.
High percentage of fixed costs
B.
High operating leverage
C.
More financial risk
D.
High interest rates
E.
More stable operations
3. Which of the following is an example of business risk?
A.
Default risk
B.
Prepayment risk
C.
Strategic risk
D.
Currency risk
E.
Equity risk
4. Which of the following is considered a part of financial risk?
A.
Demand variability
B.
Sales price variability
C.
The extent to which operating costs are fixed
D.
Changes in interest rates on debt
E.
The ability to change prices as costs change
Homework Answers
1)
Correct option:
B.Stock Split
A is incorrect because stock appreciation or depreciation can rarely be controlled by the firm.
C is incorrect as stock issue does not leads to an increase of decrease of price.
D incorrect as repurchase may increase price
E redemption may decrease price a bit due to increased supply but it is not a measure taken by firm.
2) Option E is correct
3) B Prepayment risk
4)D Changes in rates on debt
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