Question 1

Which of the following is not a true statement?

Accepted Answer

A)  Common shareholders have a residual claim to income. 
B)  Bondholders may force a corporation into bankruptcy for failure to make interest payments. 
C)  Common shareholders are legally entitled to some dividend. 
D)  A minority interest can still elect members to the board of directors under cumulative voting even though someone else owns 51% of the stock. 
A)  Common shareholders have a residual claim to income. 
B)  Bondholders may force a corporation into bankruptcy for failure to make interest payments. 
C)  Common shareholders are legally entitled to some dividend. 
D)  A minority interest can still elect members to the board of directors under cumulative voting even though someone else owns 51% of the stock.

Question 2

Which of the following is the correct order of corporate issues based on risk and return? (most risk-return to least risk-return)

Accepted Answer

A)  common stock, subordinated debentures, secured debt, treasury bills 
B)  preferred stock, common stock, subordinated debentures, secured debt 
C)  common stock, long-term government bonds, secured debt, subordinated debt 
D)  common stock, secured debt, subordinated debentures, preferred stock 
A)  common stock, subordinated debentures, secured debt, treasury bills 
B)  preferred stock, common stock, subordinated debentures, secured debt 
C)  common stock, long-term government bonds, secured debt, subordinated debt 
D)  common stock, secured debt, subordinated debentures, preferred stock

Question 3

A rights offering

Accepted Answer

A)  gives a firm a built-in market for new securities. 
B)  will likely lead to considerably higher distribution costs. 
C)  will increase the shareholder's total valuation. 
D)  is the least expensive way to raise capital. 
A)  gives a firm a built-in market for new securities. 
B)  will likely lead to considerably higher distribution costs. 
C)  will increase the shareholder's total valuation. 
D)  is the least expensive way to raise capital.

Which of the following is not a true statement?

Which of the following is the correct order of corporate issues based on risk and return? (most risk-return to least risk-return)

A rights offering

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

The Time Value of Money

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

External Growth Through Mergers

International Financial Management

Filters

Exam 17: Common and Preferred Stock Financing

Which of the following is not a true statement?

Which of the following is the correct order of corporate issues based on risk and return? (most risk-return to least risk-return)

A rights offering

The Goals and Activities of Financial Management

Review of Accounting

Financial Analysis

Financial Forecasting

Operating and Financial Leverage

Working Capital and the Financing Decision

Current Asset Management

Sources of Short-Term Financing

The Time Value of Money

Valuation and Rates of Return

Cost of Capital

The Capital Budgeting Decision

Risk and Capital Budgeting

Capital Markets

Investment Banking: Public and Private Placement

Long-Term Debt and Lease Financing

Dividend Policy and Retained Earnings

Convertibles, Warrants and Derivatives

External Growth Through Mergers

International Financial Management

Filters