Exam 14: An Overview of Corporate Financing

A firm has $100 million in current liabilities, $200 million in long-term debt, $300 million in stockholders' equity, and total assets of $600 million. Calculate the firm's ratio of long-term debt to long-term debt plus equity.

The following are debts in disguise: I.accounts payable II.leases III.underfunded pensions

U.S. firms, in general, have been repurchasing shares and thus net equity issues have been negative.

Which of the following are NOT usually regarded as investment funds?

Which of the following investments allows investors to own assets indirectly via shares that are part of a pool of other investors? I.REIT; II.royalty trust; III.option

Dual-class shares are often created to give one group of owners more control rights over the company than another group.

In the United States, the premium that an investor needed to pay to gain voting control was what percentage of firm value?

Which of the following statements about partnership and limited liability is (are)true?

Which voting system is most friendly towards minority shareholders?

A corporation has 1,000,000 shares outstanding and 10 directors are up for election. If the stock features cumulative voting, approximately how many shares do you have to muster in order to guarantee yourself a place on the board of directors? (Ignore possible ties.)

If you own 1,000 shares of common stock of a firm and there are five directors being elected, what is the maximum number of votes you can cast for a particular director under cumulative voting?

Consider the aggregate balance sheet for manufacturing corporations in the United States. Which of the following sources of financing plays the largest role?

A modification to the company charter that requires 75 percent shareholder approval for a merger is called a

Why do firms rely heavily on internal funds?

Generally, managers of corporations prefer internally generated cash to finance their capital expenditures because I.they can avoid the discipline of financial markets; II.the costs of issuing new securities are high; III.the announcement of a new equity issue is usually bad news for investors

Preference in position among creditors when it comes to repayment is called

During which year have U.S. nonfinancial firms raised positive net equity?

Compared to normal bondholders, convertible bondholders have a greater interest in seeing the firm's stock price increase.

Financial intermediaries provide the following important functions for the economy: the payment mechanism, borrowing and lending, and pooling of risks.

Briefly list the various functions of financial institutions.