18. Which of the following is the most appropriate reason for an acquiring firm's shareholders to prefer using stock financing for acquisitions? A)There is no cash outflow. B)It mitigates the effects of over valuation of the target firm. C)It mitigates the effects of under valuation of the target firm. 3
D)It avoids dilution of shares. 19. Which of the following is not a method of changing the management of a firm: 20. Which of the following is not correct concerning futures contracts? 21. The purpose of a margin account for a futures contract is to: 22. As time draws closer to contract expiration, futures contract prices can be expected to:A)increase as the demand for delivery intensifies. B)decrease as speculators resolve the uncertainty of prices. C)move similarly to broad-based market indices, such as the S&P 500. D)converge upon the spot price. 23. Futures contracts contrast with forward contracts by 24. A forward contract is described by 25.Firm A is paying $750,000 in interest payments a year while Firm B is paying LIBOR plus 75 basis points on $10,000,000 loans. The current LIBOR rate is 6.5%. Firm A and B have agreed to swap interest payments, how much will paid to which Firm this year? 4
26. Which of the following statements is correct for an interest rate swap?A)There is an exchange on principal between counterparties.B)There is no exchange of principal between counterparties.C)There is an exchange of currencies between counterparties.D)There is no exchange of cash between counterparties.
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