Quiz 18 - 1 Some firms do not formally appoint a financial manager 2 A firm can increase returns for shareholders through a strategic use of debt

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1) Some firms do not formally appoint a financial manager. True False 2) A firm can increase returns for shareholders through a  strategic use of debt capital, a technique known as debenture  financing. True False Rationale: The strategy of using debt to increase returns to equity investors is known as leverage. Review this topic 3) Unsecured loans require no collateral. True False Rationale: Unsecured loans are based solely on the good credit of the borrower. Review this topic 4) Interest rates are generally higher for short-term financing.
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True False Rationale: Interest rates are generally higher for long-term financing because the lender has to incur the risk of loss for a longer period of time. Review this topic 5) Debenture bonds are backed by some form of collateral. True False Rationale: A secured bond is backed by some form of collateral; debenture bonds are backed by the good name of the company. Review this topic
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This note was uploaded on 03/24/2009 for the course IEE iee 220 taught by Professor Robertfleischner during the Spring '08 term at ASU.

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Quiz 18 - 1 Some firms do not formally appoint a financial manager 2 A firm can increase returns for shareholders through a strategic use of debt

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