Question

1) Financing will cost more if ________.

A) the opportunity cost is low for the financier

B) investors lend less money

C) the funding is for long-term

D) the perceived risk is less

E) a company is financially solid

2) Prime rate is the ________.

A) lowest rate of interest that banks charge for short-term loans

B) average rate of interest charged by banks on their customers

C) interest rate that the Federal Reserve charges on loans

D) interest that the Federal Reserve pays for deposits

E) interest rate banks charge to their least creditworthy customers

3) Perceived risk, interest rates, and opportunity cost all determine ________.

A) factoring formulas

B) leveraging

C) cost of capital

D) smart contracts

E) leveraging opportunities

4) ________ is the technique of increasing the rate of return on an investment by financing it with borrowed funds.

A) Returns projection

B) Budgeting

C) Leveraging

D) Forecasting

E) Financial projection

5) When comparing internal and external financing, what is the value of the most appealing alternative from among those that were not chosen?

A) Rate of return

B) Leverage

C) Capital structure

D) Opportunity cost

E) Factoring

Answer 1

1. C ( the funding is for long-term)

2. A(lowest rate of interest that banks charge for short-term loans)

3. C(cost of capital)

4. C (Leveraging)

5. D (opportunity cost)

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