markets (underwriting)Answers:helping companies sell new debt or equity issues in the security markets (underwriting)making home mortgage loans to consumerstaking deposits from foreignersnone of the aboveIf a firm needs to finance a new corporate headquarters building, then it would most likely seek the funds in the:Selected Answer:capital market.Answers:money market.capital market.options market.grocery market.If inflation is anticipated to be 5 percent during the next year, while the real rate of interest for a one-year loan is 5 percent, then what should the nominal rate of interest be for a risk-free one-year loan?Selected Answer:10Correct Answer:10Answer range +/-0 (10.0 - 10.0)Response Feedback:nominal = real + inflationnominal = 5 + 5nominal = 10=
Suppose you are a financial manager at a manufacturing company that is going to make a five-year loan to a key supplier. The inflation rate over the next five years is expected to be 2, 3, 4, 5, and 6 percent. If the real rate of interest is 6 percent, what is the nominal rate on this loan? (Hint: use the average inflation rate as the inflation premium.)Selected Answer:10Correct Answer:10Answer range +/-0 (10.0 - 10.0)Response Feedback:nominal = real + average inflationnominal = 6 + (2 + 3 + 4 + 5 + 6) / 5nominal = 6 + 4nominal = 10Tuesday, September 20, 2016 3:25:24 PM MSTAccounting profits include noncash expenses like depreciation. These noncash expenses are "added back" when we calculate the cash flows.Selected Answer:TrueAnswers:TrueFalseThe income statement identifies the major sources of revenues generated by the firm and the corresponding expenses that were needed to generate those revenues.Selected Answer:TrueAnswers:TrueFalseThe net book value of an asset on the balance sheet is the historical cost of the asset less the accumulated depreciation.Selected Answer:TrueAnswers:TrueFalse
The current market value of an asset is the amount of cash that a firm would receive for the asset if the asset was sold on the open market.Selected Answer:TrueAnswers:TrueFalseOn the Statement of Cash Flows, the cash flows from operating activities relate to the buying and selling of long-term assets like plant and equipment.Selected Answer:FalseAnswers:TrueFalseResponse Feedback:Buying and selling of long-term assets like plant and equipment are "Investing Activities."The generally accepted accounting principles (GAAP) areSelected Answer:rules and procedures that define how companies are to maintain financial records and prepare financial reports.Answers:rules that outline how a firm can operate ethically.rules on how the firm will be valued in the event of a merger.rules and procedures that define how companies are to maintain financial records and prepare financial reports.rules for how a company can issue stock to raise money.On June 23, Sunshine Cosmetics sold $250,000 worth of its products to Rynex Corporation, with the payment to be made in 90 days on September 20. The firm's accountants should recognize the sale onSelected Answer:June 23Answers:June 23
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