Kira Sigard, CFA and an attorney with an investment banking firm, structures a client’s bond issue to include a "poison put". This is a provision that requires the issuer to redeem the bond at par in the case of a corporate takeover, a merger, or anti-takeover measure that would dissipate significant corporate assets. An investor who purchases this bond is protected from what type of risk()
A. Call Risk.
B. Reinvestment Risk.
C. Event Risk.
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Utilitarianism, in reference to economic fairness, refers to the idea that:()
A. the greatest good occurs when wealth is equalized.
B. the greatest utility of production and consumption results from competitive markets.
C. equality of opportunity is an important measure of economic fairness.
Under which of the following conditions would a firm be most likely to issue variable-rate debt()
A. Operating cash flows are positively correlated with short-term interest rates.
B. Operating cash flows are negatively correlated with short-term interest rates.
C. The yield curve is sloping sharply downward.
A firm has $100 in equity and $ 300 in debt. The firm recently issued bonds at the market required rate of 9 percent. The firm’s beta is 1.125, the risk-free rate is 6 percent, and the expected return in the market is 14 percent. Assume the firm is at their optimal capital structure and the firm’s tax rate is 40 percent. What is the firm’s weighted average cost of capital (WACC)()
A. 7.8%.
B. 5.4%.
C. 8.6%.
Which of the following is TRUE about the consideration of depreciation in the operations section of a cash flow statement Direct Method Indirect Method()
A. Considers Considers
B. Considers Does not consider
C. Does not consider Consider