Finance - 11. You recently sold 200 shares of Disney stock,...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
11. You recently sold 200 shares of Disney stock, and the transfer was made through a broker. This is an example of: A) An over-the-counter market transaction. B) A money market transaction. C) A primary market transaction. D) A secondary market transaction. E) A futures market transaction. 12. Which of the following actions would be most likely to reduce conflicts between stockholders and bondholders? A) A government regulation that banned the use of convertible bonds. B) Including restrictive covenants in the company’s bond indenture (which is the contract between the company and its bondholders). C) The passage of laws that make it harder for hostile takeovers to succeed. D) The firm begins to use only long-term debt, e.g., debt that matures in 30 years or more, rather than debt that matures in less than one year. E) Compensating managers with more stock options and less cash income. 13. Consider the following balance sheet, for Games Inc. Because Games has $800,000 of retained earnings, we know that the company would be able to pay cash to buy an asset with a cost of $200,000. Cash $ 50,000 Accounts payable $ 100,000 Inventory 200,000 Accruals 100,000 Accounts receivable 250,000 Total CL $ 200,000
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Total CA $ 500,000 Debt 200,000 Net fixed assets $ 900,000 Common stock 200,000 Retained earnings 800,000 Total assets $1,400,000 Total L & E $1,400,000 A) True B) False 14. If a firm is reporting its income in accordance with generally accepted accounting principles, then its net income as reported on the income statement should be equal to its free cash flow. A) True B) False 15. The days sales outstanding tells us how long it takes, on average, to collect after a sale is made. The DSO can be compared with the firm's credit terms to get an idea of whether customers are paying on time. A) False B) True 16. Which of the following statements is CORRECT? A) Hedge funds have more in common with commercial banks than with any other type of financial institution. B) Hedge funds are legal in Europe and Asia, but they are not permitted to operate in the United States. C) Hedge funds are not as highly regulated as most other types of financial institutions. The justification for this light regulation is that only "sophisticated" investors (i.e., those with high net worths and high incomes) are permitted to invest in these funds, and such investors supposedly can do any necessary "due diligence" on their own rather than have it done by the SEC or some other regulator. D) Hedge funds are legal in the United States, but they are not permitted to operate in Europe or Asia.
Background image of page 2
E) Hedge funds have more in common with investment banks than with any other type of financial institution. 17.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 4
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/28/2010 for the course FIN 2000 taught by Professor Alvarez during the Spring '09 term at Miami Dade College, Miami.

Page1 / 11

Finance - 11. You recently sold 200 shares of Disney stock,...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online