ch5
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ch5

Course Number: ACCT 433, Spring 2011

College/University: Lake Superior State...

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CHAPTER 5 THE COST OF MONEY (INTEREST RATES) TRUE/FALSE 1. The nominal rate of interest is defined as the sum of the nominal risk-free rate of return and the expected inflation rate. ANS: F kNom = kRF + DRP + LP + MRP. DIF: Easy TOP: Interest rates 2. If the Federal Reserve tightens the money supply, other things held constant, short-term interest rates will be pushed upward, and this increase probably will be...

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5 CHAPTER THE COST OF MONEY (INTEREST RATES) TRUE/FALSE 1. The nominal rate of interest is defined as the sum of the nominal risk-free rate of return and the expected inflation rate. Register to View AnswerkNom = kRF + DRP + LP + MRP. DIF: Easy TOP: Interest rates 2. If the Federal Reserve tightens the money supply, other things held constant, short-term interest rates will be pushed upward, and this increase probably will be greater than the increase in rates in the long-term market. Register to View AnswerDIF: Easy TOP: Interest rates 3. The term structure is defined as the relationship between interest rates and maturities of similar securities. Register to View AnswerDIF: Easy TOP: Term structure of interest rates 4. During or near peaks of business activity, yield curves that are flat or downward sloping (possibly with humps) often are prevalent. Register to View AnswerDIF: Easy TOP: Yield curve 5. The expectations theory postulates that the term structure of interest rates is based on expectations regarding future inflation rates. Register to View AnswerDIF: Easy TOP: Term structure theories 6. The fact that a percentage of the interest income received by one corporation is excluded from taxable income has encouraged firms to use more debt financing relative to equity financing. Register to View AnswerDIF: Easy TOP: Interest income 7. If the tax laws stated that $0.50 out of every $1.00 of interest paid by a corporation was allowed as a tax-deductible expense, it would probably encourage companies to use more debt financing than they presently do, other things held constant. Register to View AnswerDIF: Easy TOP: Interest expense 8. The real rate of interest is composed of a risk-free rate of interest plus a premium that reflects the riskiness of the security. Register to View AnswerDIF: Easy TOP: Interest rates 9. The yield curve is downward sloping, or inverted, if the long-term rates are higher than the shortterm rates. Register to View AnswerDIF: Easy TOP: Yield curve 83 Chapter5TheCostofMoney 10. The liquidity preference theory states that each borrower and lender has a preferred maturity and that the slope of the yield curve depends on supply and demand for funds in the long-term market relative to the short-term market. Register to View AnswerDIF: Easy TOP: Term structure theories 11. If you have information that a recession is ending, and the economy is about to enter a boom, and your firm needs to borrow money, it should probably issue long-term rather than short-term debt. Register to View AnswerDIF: Medium TOP: Term structure of interest rates 12. The two reasons most experts give for the existence of a positive maturity risk premium are (1) because investors are assumed to be risk averse, and (2) because investors prefer to lend long while firms prefer to borrow short. Register to View AnswerDIF: Medium TOP: Term structure theories 13. An investor with a six-year investment horizon believes that interest rates are determined only by expectations about future interest rates, (i.e., this investor believes in the expectations theory). This investor should expect to earn the same rate of return over the 6-year time horizon if he or she buys a 6-year bond or a 3-year bond now and another 3-year bond three years from now (ignore transaction costs). Register to View AnswerDIF: Medium TOP: Term structure theories 14. The existence of an upward sloping yield curve proves that the liquidity preference theory is correct, because an upward sloping curve necessarily implies that firms must offer a maturity risk premium in order to induce investors to lend for longer periods. Register to View AnswerDIF: Medium TOP: Term structure theories 15. Suppose financial institutions, such as savings and loans, were required by law to make longterm, fixed interest rate mortgages, but, at the same time, were largely restricted, in terms of their capital sources, to deposits that could be withdrawn on demand. Under these conditions, these financial institutions should prefer a "normal" yield curve to an inverted curve. Register to View AnswerDIF: Medium TOP: Yield curve 16. Investors with a higher time preference for consumption will demand a lower rate of return to forego current consumption and save than investors with a lower time preference for consumption. Register to View AnswerDIF: Medium TOP: Cost of money 17. Firms with the most profitable investment opportunities are willing and able to pay the most for capital, so they tend to attract it away from less efficient firms or from those whose products are not in demand. Register to View AnswerDIF: Medium TOP: Interest rates 18. Bonds with higher liquidity will demand higher interest rates in the market since they can be easily converted into cash on short notice at or near the fair market value for that bond. Register to View AnswerDIF: Medium TOP: Interest rates MULTIPLE CHOICE 1. Which of the following statements is most correct? Other things held constant. a. the "liquidity preference theory" would generally lead to an upward sloping yield curve. Chapter5TheCostofMoney 84 b. c. d. e. the "market segmentation theory" would generally lead to an upward sloping yield curve. the "expectations theory" would generally lead to an upward sloping yield curve. the yield curve under "normal" conditions would be horizontal (i.e., flat). a downward sloping yield curve would suggest that investors expect interest rates to increase in the future. Register to View AnswerThe liquidity preference theory states that investors prefer shorter-maturity bonds to longer maturities, other things (like interest rates) held constant. That preference arises because longterm bonds are exposed to more interest rate risk than short-term bonds. In any event, the liquidity preference theory would lead to an upward sloping yield curve. DIF: Easy OBJ: TYPE: Conceptual TOP: Term structure of interest rates 2. Your uncle would like to restrict his interest rate risk and his default risk, but he still would like to invest in corporate bonds. Which of the possible bonds listed below best satisfies your uncle's criteria? a. AAA bond with 10 years to maturity. b. BBB perpetual bond. c. BBB bond with 10 years to maturity. d. AAA bond with 5 years to maturity. e. BBB bond with 5 years to maturity. Register to View AnswerDIF: Easy OBJ: TYPE: Conceptual TOP: Risk and return 3. If the yield curve is downward sloping, what is the yield to maturity on a 10-year Treasury coupon bond, relative to that on a 1-year T-bond? a. The yield on the 10-year bond is less than the yield on a 1-year bond. b. The yield on a 10-year bond will always be higher than the yield on a 1-year bond because of maturity premiums. c. It is impossible to tell without knowing the coupon rates of the bonds. d. The yields on the two bonds are equal. e. It is impossible to tell without knowing the relative risks of the two bonds. Register to View AnswerDIF: Easy OBJ: TYPE: Conceptual TOP: Yield curve 4. If the expectations theory of the term structure of interest rates is correct, and if the other term structure theories are invalid, and we observe a downward sloping yield curve, which of the following is a true statement? a. Investors expect short-term rates to be constant over time. b. Investors expect short-term rates to increase in the future. c. Investors expect short-term rates to decrease in the future. d. It is impossible to say unless we know whether investors require a positive or negative maturity risk premium. e. The maturity risk premium must be positive. Register to View AnswerDIF: Easy TOP: Term structure theories OBJ: TYPE: Conceptual 5. Which of the following statements is correct? a. For the most part, our federal tax rates are progressive, because higher incomes are taxed at higher average rates. b. Bonds issued by a municipality such as the city of Miami would carry a lower interest rate than bonds with the same risk and maturity issued by a private corporation such as Florida Power & Light. c. Our federal tax laws tend to encourage corporations to finance with debt rather than with 85 Chapter5TheCostofMoney equity securities. d. Our federal tax laws encourage the managers of corporations with surplus cash to invest it in stocks rather than in bonds. However, other factors may offset tax considerations. e. All of the above statements are true. Register to View AnswerDIF: Easy TOP: Taxes and financing OBJ: TYPE: Conceptual 6. Which of the following is not one of the four fundamental factors that affect the cost of money? a. production opportunities b. time preferences for consumption c. risk d. liquidity e. inflation Register to View AnswerDIF: Easy OBJ: TYPE: Conceptual TOP: Cost of money 7. Interest rates on 1-year, 2-year, and 3-year Treasury bills are 5%, 6%, and 7% respectively. Assume that the pure expectations theory holds and that the market is in equilibrium. Which of the following statements is most correct? a. The maturity risk premium is positive. b. Interest rates are expected to rise over the next two years. c. The market expects one-year rates to be 5.5% one year from today. d. Answers a, b, and c are all correct. e. Only answers b and c are correct. Register to View Answerk = kRF + DRP + LP + MRP. For Treasury securities, DRP and LP are equal to zero. Further, MRP is only appropriate for long-term bonds; since these Treasury securities are short-term securities, MRP is close to zero. Therefore, statement a is false. Statement c is false because where x equals one-year Treasury rates one year from today. If you solve this equation, you will find that x = 7%, not 5.5%. As a result, statement b is the only correct statement. DIF: Medium OBJ: TYPE: Conceptual TOP: Expectations theory 8. If the Federal Reserve sells $50 billion of short-term U.S. Treasury securities to the public, other things held constant, what will this tend to do to short-term security prices and interest rates? a. Prices and interest rates will both rise. b. Prices will rise and interest rates will decline. c. Prices and interest rates will both decline. d. Prices will decline and interest rates will rise. e. There will be no changes in either prices or interest rates. Register to View AnswerDIF: Medium TOP: Security transactions OBJ: TYPE: Conceptual 9. Assume that the current yield curve is upward sloping, or normal. This implies that a. Short-term interest rates are more volatile than long-term rates. b. Inflation is expected to subside in the future. c. The economy is at the peak of a business cycle. d. Long-term bonds are a better buy than short-term bonds. e. None of the above statements is necessarily implied by the yield curve given. Chapter5TheCostofMoney 86 Register to View Answer DIF: Medium OBJ: TYPE: Conceptual TOP: Yield curve 10. Which of the following statements is correct? a. The maturity premiums embedded in the interest rates on U.S. Treasury securities are due primarily to the fact that the probability of default is higher on long-term bonds than on short-term bonds. b. Reinvestment rate risk is lower, other things held constant, on long-term than on shortterm bonds. c. According to the market segmentation theory of the term structure of interest rates, we should normally expect the yield curve to slope downward. d. The expectations theory of the term structure of interest rates states that borrowers generally prefer to borrow on a long-term basis while savers generally prefer to lend on a short-term basis, and that as a result, the yield curve normally is upward sloping. e. If the maturity risk premium was zero and the rate of inflation was expected to decrease in the future, then the yield curve for U.S. Treasury securities would, other things held constant, have an upward slope. Register to View AnswerDIF: Medium TOP: Interest rate concepts OBJ: TYPE: Conceptual 11. Allen Corporation can (1) build a new plant which should generate a before-tax return of 11 percent, or (2) invest the same funds in the preferred stock of FPL, which should provide Allen with a before-tax return of 9%, all in the form of dividends. Assume that Allen's marginal tax rate is 25 percent, and that 70 percent of dividends received are excluded from taxable income. If the plant project is divisible into small increments, and if the two investments are equally risky, what combination of these two possibilities will maximize Allen's effective return on the money invested? a. All in the project. plant b. All in FPL preferred stock. c. 60% in the project; 40% in FPL. d. 60% in FPL; 40% in the project. e. 50% in each. Register to View AnswerAfter-tax return on the new project: 0.11(1 - T) = 0.11(0.75) = 0.0825 = 8.25%. After-tax return on the preferred stock: 0.09[1 - 0.25(0.3)] = 0.08325 = 8.325%. Therefore, invest 100 percent in the FPL preferred stock. DIF: Medium OBJ: TYPE: Conceptual TOP: After-tax returns 87 Chapter5TheCostofMoney 12. The normal yield curve is upward sloping implying that a. the return on short-term securities are higher than the return on long-term securities of similar risk. b. the return on long-term securities are equal to the return on short-term securities of similar risk. c. the return on short-term securities are lower than the return on long-term securities of similar risk. d. the return on bonds with a higher default risk is higher than the returns on bonds with lower default risk. e. the return on bonds with a lower default risk is higher than the returns on bonds with higher default risk. Register to View AnswerDIF: Medium OBJ: TYPE: Conceptual TOP: Yield curve 13. Carter Corporation has some money to invest, and its treasurer is choosing between City of Chicago municipal bonds and U.S. Treasury bonds. Both have the same maturity, and they are equally risky and liquid. If Treasury bonds yield 6 percent, and Carter's marginal income tax rate is 40 percent, what yield on the Chicago municipal bonds would make Carter's treasurer indifferent between the two? a. 2.40% b. 3.60% c. 4.50% d. 5.25% e. 6.00% Register to View AnswerChicago municipal bonds = Tax Exempt; BT yield = AT yield. U.S. Treasury bonds = AT yield = 6%(1 - 0.4) = 3.60%. 3.60% = yield where indifferent between the two. DIF: Easy OBJ: TYPE: Problem TOP: After-tax yield 14. As a corporate investor paying a marginal tax rate of 34 percent, if 70 percent of dividends are excludable, what would be your after-tax dividend yield on preferred stock with a 16 percent before-tax dividend yield? a. 6.36% b. 7.36% c. 12.19% d. 13.01% e. 14.37% Register to View Answer16%[1 - 0.34(0.30)] = 14.368% 14.37%. DIF: Easy OBJ: TYPE: Problem TOP: After-tax returns 15. Treasury securities that mature in 6 years currently have an interest rate of 8.5%. Inflation is expected to be 5% each of the next three years and 6% each year after the third year. The maturity risk premium is estimated to be 0.1%(t - 1), where t is equal to the maturity of the bond (i.e., the maturity risk premium of a one-year bond is zero). The real risk-free rate is assumed to be constant over time. What is the real risk-free rate of interest? a. 0.25% b. 0.50% c. 1.00% d. 1.75% Chapter5TheCostofMoney 88 e. 2.50% Register to View AnswerIP6 = [5%(3) + 6%(3)]/6 = 5.5%. MRP = 0.1%(t - 1) = 0.1%(5) = 0.5%. kRF = k* + MRP + IP 8.5% = k* + 0.5% + 5.5% k* = 2.5%. DIF: Easy OBJ: TYPE: Problem TOP: Real risk-free rate of interest 16. Assume that the expectations theory holds, and that liquidity and maturity risk premiums are zero. If the annual rate of interest on a 2-year Treasury bond is 10.5 percent and the rate on a 1year Treasury bond is 12 percent, what rate of interest should you expect on a 1-year Treasury bond one year from now? a. 9.0% b. 9.5% c. 10.0% d. 10.5% e. 11.0% Register to View Answerk2 = (k1 in Year 1 + k1 in Year 2)/2 10.5% = (12% + k1 in Year 2)/2 k1 in Year 2 = 9%. DIF: Easy OBJ: TYPE: Problem TOP: Expected interest rates 17. Assume that expected rates of inflation over the next 5 years are 4 percent, 7 percent, 10 percent, 8 percent, and 6 percent, respectively. What is the average expected inflation rate over this 5-year period? a. 6.5% b. 7.5% c. 8.0% d. 6.0% e. 7.0% Register to View AnswerIP5 = (4% + 7% + 10% + 8% + 6%)/5 = 7%. Note: The geometric average is 6.981%, which rounds to 7%. DIF: Easy OBJ: TYPE: Problem TOP: Average inflation 18. Your corporation has the following cash flows: Operating income Interest received Interest paid Dividends received Dividends paid $250,000 10,000 45,000 20,000 50,000 If the applicable income tax rate is 40 percent, and if 70 percent of dividends received are exempt from taxes, what is the corporation's tax liability? a. $74,000 b. $88,400 c. $91,600 d. $100,000 89 Chapter5TheCostofMoney e. $106,500 Register to View AnswerOperating income Interest received Interest paid Dividends received (taxable) Taxable income * $250,000 10,000 (45,000) 6,000* $221,000 $20,000(0.30) = $6,000. OBJ: TYPE: Problem TOP: Corporate taxes Taxes = 0.4($221,000) = $88,400. DIF: Easy 19. Assume that k* = 1.0%; the maturity risk premium is found as MRP = 0.2%(t - 1) where t = years to maturity; the default risk premium for AT&T bonds is found as DRP = 0.07%(t - 1); the liquidity premium is 0.50% for AT&T bonds but zero for Treasury bonds; and inflation is expected to be 7%, 6%, and 5% during the next three years and then 4% thereafter. What is the difference in interest rates between 10-year AT&T bonds and 10-year Treasury bonds? a. 0.25% b. 0.50% c. 0.63% d. 1.00% e. 1.13% Register to View Answerk* = 1.0% MRP = 0.2% (10-1) = 1.8% DRP = 0.07% (9) = 0.63% LP = 0.5% kit = k* + IPt + DRPt + LPt + MRPt kATT = 1.0% + 4.6% kT-Bond = 1.0% + 4.6% Difference DIF: Medium + + 0.63% 0% + + 0.5% 0% + + 1.8% 1.8% = = 8.53% 7.40% 1.13% OBJ: TYPE: Problem TOP: Expected interest rates 20. You are given the following data: k* = real risk-free rate Constant inflation premium Maturity risk premium Default risk premium for AAA bonds Liquidity premium for long-term T-bonds 4% 7% 1% 3% 2% Assume that a highly liquid market does not exist for long-term T-bonds, and the expected rate of inflation is a constant. Given these conditions, the nominal risk-free rate for T-bills is __________, and the rate on long-term Treasury bonds is __________. a. 4%; 14% b. 4%; 15% c. 11%; 14% d. 11%; 15% Chapter5TheCostofMoney 90 e. 11%; 17% Register to View AnswerNominal risk-free rate: kRF = k* + IP = 4% + 7% = 11%. T-bond rate: kRF = k* + IP + DRP + LP + MRP = 4% + 7% + 0% + 2% + 1% = 14%. Note that there is no default premium on a Treasury security. DIF: Medium OBJ: TYPE: Problem TOP: Interest rates 21. You read in The Wall Street Journal that 30-day T-bills currently are yielding 8 percent. Your brother-in-law, a broker at Kyoto Securities, has given you the following estimates of current interest rate premiums: Inflation premium Liquidity premium Maturity risk premium Default risk premium Based on these data, the real risk-free rate of return is a. 0% b. 1% c. 2% d. 3% e. 4% Register to View AnswerT-bill rate = k* + IP 8% = k* + 5% k* = 3%. DIF: Medium 5% 1% 2% 2% OBJ: TYPE: Problem TOP: Real risk-free rate of interest 22. Assume that a 3-year Treasury note has no maturity premium, and that the real, risk-free rate of interest is 3 percent. If the T-note carries a yield to maturity of 13 percent, and if the expected average inflation rate over the next 2 years is 11 percent, what is the implied expected inflation rate during Year 3? a. 7% b. 8% c. 9% d. 17% e. 18% Register to View AnswerKRF = k* + IP 13% = 3% + IP IP = 10% Therefore, the average inflation expected over the next 3 years is 10 percent. Using an arithmetic average: 30% = 22% + IP3 IP3 = 8% 91 Chapter5TheCostofMoney DIF: Medium OBJ: TYPE: Problem TOP: Expected inflation 23. Assume that the current interest rate on a 1-year bond is 8 percent, the current rate on a 2-year bond is 10 percent, and the current rate on a 3-year bond is 12 percent. If the expectations theory of the term structure is correct, what is the 1-year interest rate expected during Year 3? (Base your answer on an arithmetic rather than geometric average.) a. 12.0% b. 16.0% c. 13.5% d. 10.5% e. 14.0% Register to View AnswerTerm structure theories Security Maturity 1 year 2 year 3 year Current Rate 8% 10% 12% k1,Year 1 8% 8% 8% 12% 12% ? k2,Year 2 k3,Year 3 Calculate k2, the one-year rate in Year 2: 10% = (8% + k2)/2 ks = 12% Calculate k3, the one-year rate in Year 3: 12% = (8% + 12% + ks)/3 36% = 20% + k3 k3 = 16% DIF: Medium OBJ: TYPE: Problem TOP: Expected inflation 24. Assume that the real risk-free rate, k*, is 4 percent, and that inflation is expected to be 9% in Year 1, 6% in Year 2, and 4% thereafter. Assume also that all Treasury bonds are highly liquid and free of default risk. If 2-year and 5-year Treasury bonds both yield 12%, what is the difference in the maturity risk premiums (MRPs) on the two bonds, i.e., what is MRP5 - MRP2? a. 2.1% b. 1.8% c. 5.0% d. 3.0% e. 2.5% Register to View AnswerFirst, note that we will use the equation kt = 4% + IPt + MRPt. We have the data needed to find the IPs: IP5 = (9% + 6% + 4% + 4% + 4%)/5 = 27%/5 = 5.4%. IP2 = (9% + 6%)/2 = 7.5%. Now we can substitute into the equation: k5 = 4% + 5.4% + MRP = 12%. k2 = 4% + 7.5% + MRP = 12%. Now we can solve for the MRPs, and find the difference: MRP5 = 12% - 9.4% = 2.6%. MRP2 = 12% - 11.5% = 0.5%. Difference = (2.6% - 0.5%) = 2.1%. Chapter5TheCostofMoney 92 DIF: Medium OBJ: TYPE: Problem TOP: Maturity risk premium 25. Solarcell Corporation has $20,000 which it plans to invest in marketable securities. It is choosing between AT&T bonds which yield 11%, State of Florida municipal bonds which yield 8%, and AT&T preferred stock with a dividend yield of 9%. Solarcell's corporate tax rate is 40%, and 70% of the preferred stock dividends it receives are tax exempt. Assuming that the investments are equally risky and that Solarcell chooses strictly on the basis of after-tax returns, which security should be selected? Answer by giving the after-tax rate of return on the highest yielding security. a. 8.46% b. 8.00% c. 7.92% d. 9.00% e. 9.16% Register to View AnswerFlorida muni bond After-tax yield on FLA bond = 8%. (The munis are tax exempt.) AT&T bond After-tax yield on AT&T bond = 11% - Taxes = 11% - 11%(0.4) = 6.6%. Alternate solution: AT&T bond Invest $20,000 @ 11% = $2,200 interest. Pay 40% tax, so after-tax income = $2,200(1 - T) = $2,200(0.6) = $1,320. After-tax rate of return = $1,320/$20,000 = 6.6%. AT&T preferred stock After-tax yield = 9% - Taxes = 9% - 0.3(9%)(0.4) = 9% - 1.08% = 7.92%. Therefore, invest in the Florida muni bonds which yield 8% after taxes. Note: this problem can be made harder by asking for the tax rate that would cause the company to prefer the AT&T bonds or the preferred stock. DIF: Medium OBJ: TYPE: Problem TOP: After-tax yield 26. A 9 percent coupon bond issued by the State of Pennsylvania sells for $1,000 and thus provides a 9 percent yield to maturity. What yield on a Synthetic Chemical Company bond would cause the two bonds to provide the same after-tax rate of return to an investor in the 28 percent tax bracket? a. 12.50% b. 17.50% c. 7.00% d. 14.00% e. 9.00% Register to View AnswerBefore-tax return(1 - T) = 9% Before-tax return(0.72) = 9% Before-tax return = 9%/0.72 = 12.50%. DIF: Medium OBJ: TYPE: Problem TOP: After-tax returns 93 Chapter5TheCostofMoney 27. In 2000, Craig and Kathy Koehler owned a small business which was held as a proprietorship in Kathy's name. They were thinking of incorporating if that would lower their total tax liability. The Koehlers expected the company to earn $100,000 before taxes next year. They planned to take out a salary of $45,000, and to reinvest the rest in the business. Their personal deductions total $10,750 and if they choose not to incorporate they will file a joint return. (1) What is their expected total tax liability as a proprietorship? (2) As a corporation? (3) Should they incorporate? a. $19,393.50; $22,250.00; No b. $19,393.50; $13,887.50; Yes c. $6,793.50; $6,637.50; Yes d. $22,403.50; $15,753.50; Yes e. $20,777.50; $22,250.00; No Register to View AnswerAs a sole proprietorship: Taxable income EBT Personal deductions Tax liability = $6,457.50 + ($89,250 - $43,050)(0.28) = $6,457.50 + $12,936 = $19,393.50 $100,000 (10,750) $ 89,250 As a corporation: Taxable income Salary Personal deductions 1) Personal taxable income 2) Company EBT 1) Personal tax liability = $34,250(0.15) 2) Corporate tax liability + $7,500 + 0.25($55,000 - $50,000) Total tax liability = $5,137.50 ($7,500 + $1,250) = $13,887.50 Yes, the Koehlers should incorporate. DIF: Tough OBJ: TYPE: Problem $45,000 (10,750) $34,250 $55,000 TOP: Business organization and taxes

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Lake Superior State University - ACCT - 433
CHAPTER 6BONDSCHARACTERISTICS AND VALUATIONTRUE/FALSE1. Typically, debentures have higher interest rates than mortgage bonds primarily because the mortgage bonds are backed by assets while debentures are unsecured. ANS: T DIF: Easy TOP: Mortgage bonds2
Lake Superior State University - ACCT - 433
CHAPTER 7 STOCKSCHARACTERISTICS AND VALUATIONTRUE/FALSE1. The additional paid-in capital account represents the difference between a stock's par value and the funds actually received from the sale of new common stock. ANS: T DIF: Easy TOP: Additional pa
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Lake Superior State University - ACCT - 433
CHAPTER 13DIVIDEND POLICYTRUE/FALSE1. The dividend irrelevance theory, proposed by Miller and Modigliani, says that as long as a firm pays a dividend, how much it pays does not affect either its cost of capital or its stock price. ANS: F DIF: Easy TOP:
Lake Superior State University - ACCT - 433
CHAPTER 14WORKING CAPITAL POLICYTRUE/FALSE1. The fact that no explicit interest cost is paid on accruals and that the firm can exercise considerable control over their level makes accruals an attractive source of additional funding. ANS: F DIF: Easy TOP
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CHAPTER 16MANAGING SHORT-TERM LIABILITIES (FINANCING)TRUE/FALSE1. If a firm is offered credit terms of 2/10, net 30, it is in the firm's financial interest to pay as early during the discount period as possible. ANS: F DIF: Easy TOP: Trade credit terms
Lake Superior State University - ACCT - 433
CHAPTER 17FINANCIAL PLANNING AND CONTROLTRUE/FALSE1. Errors in the sales forecast can be offset by similar errors in costs and income forecasts. Thus, as long as the errors are not large, sales forecast accuracy is not critical to the firm. ANS: F DIF:
Lake Superior State University - ACCT - 433
CHAPTER 18ALTERNATIVE FINANCING ARRANGEMENTS & CORPORATE RESTRUCTURINGTRUE/FALSE1. Leasing is typically a financing decision and not a capital budgeting decision. Thus, the availability of lease financing cannot affect the capital budgeting decision. AN
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Materi buku ajar tentang penganggaran modal
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BAB I PENDAHULUANPengertian Manajemen KeuanganManajemen Keuangan adalah aktivitas pemilik dan manajemen perusahaan untuk memperoleh sumber modal yang semurah-murahnya dan menggunakannya se-efektif, se-efisien, seproduktif mungkin untuk menghasilkan laba
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BAB II NILAI UANG TERKAIT DENGAN WAKTU (Time Value Of Money)1. PengertianDunia bisnis adalah aktivitas uang sebagai. Kapital akhir periode (K2) harus lebih besar dari pada kapital awal periode (K1), itu artinya bisnis memperoleh laba, atau dapat dikatak
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BAB III PENYUSUTAN DAN PAJAK1. Peraturan PerpajakanNegara memungut pajak untuk membiayai administrasi pemerintahnya. Makin besar biaya pemerintah, makin tinggi pajak yang dipungut, dan makin berat beban rakyat. Peraturan perpajakan Negara-negara di duni
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BAB 4 PASAR MODALA. SISTEM KEUANGANUang sebagai subyek dan sekaligus obyek itu dapat membentuk system yang disebut system keuangan, yaitu perpindahan dari pihak yang memiliki kelebihan uang ke pihak yang membutuhkan uang yang menciptakan harta keuangan
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BAB 5 HASIL DAN RISIKOA. RISIKO BISNISDalam dunia bisnis ada dalil klasik yakni menanggung risiko yang sekecilkecilnya untuk memperoleh hasil sebesar-besarnya. Kenyataannya bagi kaum kapiltalis adalah : (1) enggan menananggung risiko atau berupaya mempe
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BAB 6 PENYAJIAN LAPORAN KEUANGANKegiatan bisnis adalah mencari keuntungan yang digerakkan oleh kapital. Kapital ialah uang, barang, ilmu, teknologi, dan kemampuna Sumber Daya Manusia yang digunakan untuk mencari keuntungan. Kaum yang memiliki kapital unt
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BAB 7 ANALISIS KINERJA KEUANGAN (Financial Performance Analisis)Kinerja Keuangan ialah hasil kegiatan operasi perusahaan yang disaikan dalam bentuk angka-angka keuangan. Hasil kegiatan perusahaan periode sekarang haeus dibandingkan dengan: (1) Kinerja ke
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BAB 8 PERENCANAAN KEUANGANPerencanaan keuangan suatu perusahaan pada umumnya disajikan dengan model : (1) anggaran, (2) titik impas, (3) tingkat leverage operasi, dan (4) return on investment atau ROIAnggaranHasil peramalan keuangan tabel 8.3 (mengenai
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BAB 9 MANAJEMEN KASKas merupakan awal dari investasi dan operasi dari suatu perusahaan. Kas terdiri dari mata uang (currency), giro, dan rekening koran di bank (bank deposits). Perusahaan atau perseorangan menyimpan uang tunai (kas) untuk motif transaksi
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BAB 10 MANAJEMEN PIUTANGPada umumnya perusahaan menjual hasil produksinya secara kredit, kemudian melahirkan piutang dagang; penagihan piutang melahirkan kas. Hubungan antara piutang dengan kas adalah sebagai berikut: Kas Persediaan Barang Jadi Piutang K
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BAB 11 MANAJEMEN PERSEDIAANKegiatan bisnis yang memerlukan manajemen persediaan adalah bidang industri manufaktur dan perdagangan. Dalam industri manufaktur, persediaan terdiri dari: (1)persediaan bahan baku, (2)persediaan barang dalam proses, (3)persedi
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BAB 12 MANAJEMEN MODAL KERJAModal kerja adalah investasi dalam harta jangka pendek atau investasi dalam harta lancar (current assets). Modal kerja dapat dikategorikan menjadi dua yaitu modal kerja kotor (gross working capital) dan modal kerja bersih (net
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BAB 13. MANAJEMEN HARTA KEUANGANPerusahaan besar pada umumnya memiliki investasi di beberapa perusahaan yang berupa surat-surat berharga saham dan obligasi. Tujuannya adalah untuk mendapatkan deviden (saham) dan bunga (obligasi). Investasi yang dimiliki
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BAB I MERENCANAKAN BISNIS 1.1. Membangun Mindset berbisnis Di era globalisasi ini, sudah saatnya bangsa Indonesia memikirkan cara mencari terobosan dengan menanamkan sedini mungkin tentang nilai-nilai kewirausahaan terutama bagi kalangan terdidik, terlebi
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BAB II MENJALANKAN BISNIS Untuk memulai sebuah usaha memang harus didahului dengan taktik dan strategi. Membuat usaha yang besar tidak selalu membutuhkan modal yang besar. Mengawalinya dengan modal kecil pun sebuah usaha bisa tumbuh menjadi besar. Pengemb
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BAB III ASPEK Manajemen 3.1. Pengelolaan Manajemen Dalam Menjalankan sebuah bisnis, manajemen merupakan faktor yang paling penting karena tan pa manajemen perusahaan tidak akan terkelola dengan baik dan benar. dalam menjalankan perusahaan ada beberapa asp
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BAB IV Aspek Pasar Tantangan utama perusahaan- perusahaan adalah bagaimana membangun dan mempertahankan bisnis yang sehat dalam pasar dan lingkungan yang terus berubah. Agar perusahaan tetap dapat survive perusahaan harus mampu mengenali pelanggannya. Den
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BAB V ASPEK PEMASARAN 5.1. Pengertian Pemasaran Pemasaran (Marketing) : Adalah suatu aktivitas untuk memenuhi kebutuhan dan keinginan yang ada melalui penciptaan proses pertukaran yang saling menguntungkan. Aktivitas pemasaran tersebut antara lain perenca
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BAB VI ASPEK SDM Revolusi teknologi komunikasi dan informasi membuat dunia yang luas ini semakin lama semakin kecil (Global Village). Konsukensinya skala kompetisipun meningkat dari local competitive menjadi global Dengan competitive. Bisnis baru akan ber
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BAB VII ASPEK PRODUKSI Schroeder (1993) memberikan penekanan terhadap definisikegiatan produksi dan operasi pada 3 hal yaitu: 1. Pengelolaan fungsi organisasi dalam menghasilkan barang dan jasa. 2. Adanya sistem transformasi yang menghasilkan barang dan
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BAB VIII ASPEK KEUANGAN Keuangan merupakan salah satu fungsi bisnis yang bertujuan untuk membuat keputusan keputusan investasi, pendanaan dan dividen. Keputusan investasi ditujukan untuk menghasilkan kebijakan yang berhubungan dengan (a) kebijakan pengalo
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BAB IX ASPEK TEKNOLOGI INFORMASI 9.1. Pengertian Teknologi Informasi Banyak istilah yang berhubungan dengan teknologi informasi karena banyaknya perubahan dan tidak adanya kesepakatan istilah yang digunakan. Beberapa istilah yang sering digunakan adalah y
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BAB X MEMAHAMI PERILAKU KONSUMEN Secara sederhana, perilaku konsumen mengacu kepada perilaku yang ditunjukkan oleh individu dalam membeli dan menggunakan barang dan jasa. Studi secara sistematis mengenai konsumen telah berkembang pesat sejak dekade 1950an
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BAB XI ANALISIS INDUSTRI DAN PERSAINGAN11.1. Analisis Situasi Untuk Pembuatan Strategi Analisis situasi bertujuan untuk mempertimbangkan keadaan baik situasi internal perusahaan maupun lingkungan eksternal, yang langsung mempengaruhi peluang dan pilihan
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BAB XII ANALISIS PROFIL PERUSAHAAN Seberapa baik strategi yang sedang dijalankan? Apa kekuatan,kelemahan, peluang dan tantangan perusahaan? Apakah perusahaan kompetitif dalam biaya? Bagaimana posisi perusahaan di pasar? Semua pertanyaan ini mencerminkan
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BAB XIII ASPEK RESIKOIstilah resiko dalam manajemen mempunyai berbagai makna. Resiko adalah suatu variasi dari hasil-hasil yang dapat terjadi selama periode tertentu atau probabilitas sesuatu hasil/outcome yang ebrbeda dengan yang diharapkan. Resiko dapa
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BAB XIV Menyusun Proposal Bisnis Dalam Menyusun Proposal bisnis ada beberapa hal yang perlu diperhatikan yakni 1. Menggambar keseluruhan (overview) rencana strategi perusahaan yang akan dijalankan. 2. memuat latar belakang usaha 3. Menggabungkan seluruh a
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BAB XI ANALISIS INDUSTRI DAN PERSAINGANSYAFRIZAL HELMIAnalisis Situasi Pembuatan StrategiTiga peran utama dalam analisis lingkungan Policy-Oriented Role Peran analisis yang berorientasi pada kebijakan manajemen tingkatan atas dan bertujuan untuk memper
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BAB XII ANALISIS PROFIL PERUSAHAANSYAFRIZAL HELMIANALISIS SWOT SWOT singkatan dari Strength (Kekuatan), Weakness (Kelemahan), Opportunity (Peluang), Threat (Tantangan). Analisis SWOT berisi evaluasi faktor internal perusahaan beruapa kekuatan dan kelem
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BAB VIII ASPEK KEUANGANSYAFRIZAL HELMIKeputusan investasi Keputusan investasi ditujukan untuk menghasilkan kebijakan yang berhubungan dengan (a) kebijakan pengalokasian sumber dana secara optimal, (b) kebijakan modal kerja (c) kebijakan invesasi yang b
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BAB III ASPEK ManajemenSYAFRIZAL HELMIPengelolaan ManajemenAnnual Objectives & Policies Resources & Structures Productions & HRD Suportive culture Natural Environment Resistance to Change Restructuring Rewards/IncentivesManagement Issues Annual Objec
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BAB IV Aspek PasarSYAFRIZAL HELMIPengertian Pasar Pasar adalah orang-orang yang mempunyai keinginan untuk puas, uang untuk berbelanja, dan kemauan untuk membelanjakannya. Tiga unsur penting yang terdapat dalam pasar, yaitu: 1.Orang dengan segala keingi
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BAB V ASPEK PEMASARANSYAFRIZAL HELMIDEFENISIPemasaran (Marketing) : Adalah suatu aktivitas untuk memenuhi kebutuhan dan keinginan yang ada melalui penciptaan proses pertukaran yang saling menguntungkan. Aktivitas pemasaran antara lain perencanaan produ
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BAB VII ASPEK PRODUKSISYAFRIZAL HELMISchroeder (1993) memberikan penekanan terhadap definisi kegiatan produksi dan operasi pada 3 hal yaitu: 1. Pengelolaan fungsi organisasi dalam menghasilkan barang dan jasa. 2. Adanya sistem transformasi yang menghasi
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BAB XIII ASPEK RESIKOSYAFRIZAL HELMI Resiko adalah suatu variasi dari hasil-hasil yang dapat terjadi selama periode tertentu atau probabilitas sesuatu hasil/outcome yang ebrbeda dengan yang diharapkan. Resiko dapat juga dikatakan ketidakpastian yang mun
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BAB VI ASPEK SDMSYAFRIZAL HELMI Keberhasilan sebuah perusahaan sangat ditentukan sejauhmana perusahaan mampu mengelola, mengembangkan dan memotivasi karyawan yang potensial. Ed Michaels, Helen Handfield-Jhons dan Axelrod (konsultan dari McKinsey & Compa
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BAB IX ASPEK TEKNOLOGI INFORMASISYAFRIZAL HELMIDefinisi teknologi informasi Menurut Haag dan Keen, teknologi informasi adalah seperangkat alat yang membantu anda bekerja dengan informasi dan melakukan tugastugas yang berhubungan dengan pemrosesan infor
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BAB X MEMAHAMI PERILAKU KONSUMENSYAFRIZAL HELMILingkup studi perilaku konsumen Siapa yang membeli produk atau jasa ? ( WHO ) Apa yang dibeli ? ( WHAT ) Mengapa membeli produk atau jasa tersebut ? ( WHY ) Kapan membeli ? ( WHEN ) Di mana membelinya ? (
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BAB II MENJALANKAN BISNISSYAFRIZAL HELMI Untuk memulai sebuah usaha memang harus didahului dengan taktik dan strategi. Membuat usaha yang besar tidak selalu membutuhkan modal yang besar. Mengawalinya dengan modal kecil pun sebuah usaha bisa tumbuh menja
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BAB I MERENCANAKAN BISNISSYAFRIZAL HELMIMembangun Mindset berbisnis Kampus sebagai tempat untuk Merubah Paradigma cara berfikir mahasiswa dari mencari pekerjaan menjadi pencipta lapangan pekerjaan Untuk itu diperlukan sebuah jiwa entrepreneurship (kewi
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BAHAN AJARKonten Mata Kuliah E-Learning USU INHERENT 2006 BUKU AJAR STUDI KELAYAKAN BISNIS PENGUSULSYAFRIZALHELMIS,SE,M.Si DEPARTEMENMANAJEMEN FAKULTASEKONOMIUNIVERSITASSUMATERAUTARA 2006iDAFTAR ISI HalamanBAB I. Merencanakan bisnis. 1 1.1. Membang
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