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which of the following best describes the goal of the firm?
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Terms in this set (35)
if a bank loan officer were considering a company's request for a loan, which of the following statements would you consider to be correct?other things held constant, the lower the debt ratio, the lower the interest rate the bank would charge the firmwhich of the following is not a current asset?short-term debtdividends received by the firm:are usually 50% excluded from taxationif Electro Corporation sells a $20 million stock issue to an investment banking firm such as Merrill Lynch, this transaction takes place in:the primary capital marketsince there is a virtual certainty that the U.S. government will pay interest on treasury securities and will redeem them at face value when they mature, treasury securities are free of any _____________ risk.defaultwhich of the following items is not included in stockholder's equity?bondswhich of the following are tax deductible expenses for a corporation?interest paid on debtdividends paid by the firm arepaid out of net incomethe yield curve is typicallyupward slopingthe legal form of business that allows a firm to function separate and apart from its owners is the _________.corporationgross profit is defined assales revenue minus cost of goods soldOne term structure theory is based on the idea that some investors (such as savings banks) prefer shorter maturities, while others (such as pension funds) prefer longer maturities. This theory is:market segmentation theorycapital market instruments includecorporate stocks and bonds, treasury bonds, municipal bondswhich of the following would indicate an improvement in a company's financial position, holding other things constant?the current and quick ratios both increasewhich of the term structure theories would support the argument that the yield curve is upward sloping because investors expect future interest rates to rise?unbiased expectations theorysuppose your firm selects an investment banking firm to assist with your firm's $10 million stock issue. The investment banker will act as a broker and will attempt to sell each new share of stock for a commission for each share sold. This distribution method is referred to as ________.best effortsprofit maximization does not adequately describe the goal of the firm becauseprofit maximization does not consider the riskiness of returns and ignores the timing of returnsbypassing SEC registration to sell securities directly to a pension fund or insurance company is an example of a:private placementthe law that established the SEC isthe Securities Exchange Act of 1934money market instruments includenegotiable CD's, commercial paper, Treasury billssuppose your firm selects an investment banking firm to assist with your firm's $50 million bond issue. The investment bank will buy the entire issue and sell each new bond to investors. This distribution method is referred to as:negotiated purchasewhich of the term structure theories claims that legal restrictions and personal preferences limit choices for investors to certain ranges of maturities?the market segmentation theorywhich of the following is true regarding the over-the-counter marketthe OTC brokers and dealers are linked by NASDAQwhen a new issue of securities is marketed to a definite and select group of investors, such as the firm's employees or current stockholders, the issue is called a(n):privileged subscriptionif a syndicate of investment banks purchases a common stock issue from a corporation, this transaction takes place in:the primary capital market