Test 3C Chapters 11-14

Test 3C Chapters 11-14 - Exam 3C Chapters 11 -14 Course:...

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Exam 3C Chapters 11 - 14 Course: Principles of Finance BUSG 1303 Section 25049 OPC 004 Instructor: Jason P Ahrenholtz TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) Regular dividend policy is a dividend policy based on the payment of a certain percentage of earnings to owners in each dividend period. 1) 2) The firm's operating breakeven point is the level of sales necessary to cover all fixed operating costs. 2) 3) Credit analysts usually analyze an applicant's creditworthiness by using the dimensions of credit such as character, capacity, capital, collateral, and conditions. 3) 4) In a 2 - for - 1 stock split, the number of shares outstanding decreases by fifty percent and the stock's per - share par value will double. 4) 5) The payment date is five days after the date of record, on which the company will mail the dividend to the holders of record. 5) 6) As financial leverage increases, the cost of debt initially remains constant and then rises, while the cost of equity always rises. 6) 7) As credit standards are relaxed, sales are expected to increase and the investment in accounts receivable is expected to decrease. 7) 8) The levels of fixed - cost assets and funds that management selects affect the variability of returns. 8) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 9) The purpose of a reverse stock split is to 9) A) reduce trading activity. B) increase the price of stock. C) issue additional shares. D) increase the dividend. 10) 3/10 net 45 EOM translates as 10) A) a 3 percent discount may be taken on 10 percent of the purchase if the account is paid within 45 days after the end of the month. B) a 3 percent cash discount may be taken if paid in 10 days; if no cash discount is taken, the balance is due 45 days after transaction is complete. C) a 10 percent cash discount may be taken if paid in three days; if no cash discount is taken, the balance is due in 45 days. D) a 3 percent cash discount may be taken if paid in 10 days; if no cash discount is taken, the balance is due 45 days after the end of the month. 1
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11) The cost of borrowing through the sale of commercial paper is typically ________ the prime bank loan rate. 11) A) the same as B) unrelated to C) higher than D) lower than 12) Paying a stock dividend ________ the retained earnings account. 12) A) increases B) reorganizes C) has no effect on D) decreases 13) A bank lends a firm $500,000 for one year at 8 percent and requires compensating balances of 10 percent of the face value of the loan. The effective annual interest rate associated with this loan is 13) A) 7.0 percent. B) 8.9 percent. C) 7.2 percent. D) 8 percent.
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Test 3C Chapters 11-14 - Exam 3C Chapters 11 -14 Course:...

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