Exam 14: Introduction to Corporate Financing and Governance

Other things being equal,discuss how the following provisions can affect the yield to maturity of bonds: Call provision Restriction on further borrowing Provision on specific collateral for the bond Option to convert the bonds into shares

Which of the following statements is correct about a corporation that borrows from its bank at "Prime plus one %?" The interest rate:

Which of the following would be considered a Eurodollar deposit?

The benchmark interest rate that banks charge to their best customers is termed:

One way in which control of a corporation can be removed from the current board of directors is to:

An issue of bonds that is sold simultaneously in several countries is called:

Discuss what effect you would expect the following debt provisions to have on the yield that corporations must offer investors: funded (versus unfunded)debt,sinking fund,call provision,subordinated debt,secured debt.

A stock's par value is represented by:

Market value is usually greater than book value because:

What will be the effect on retained earnings if a firm with 5,000 shares outstanding earns $10 per share and has a 30% plowback ratio? It will increase by:

With respect to bonds,when interest rates increase:

Any capital surplus shown by a firm on its balance sheet results from:

One common reason for issuing two distinct classes of common stock is to:

A capital surplus is obtained when the par value of a stock is greater than the retained earnings.

If the Beta company issues $100 million worth of preferred stock,what will happen to its net worth if book value of common equity is $500 million?

Illustrate the difference between majority and cumulative voting systems using as an example a shareholder who owns 1,000 shares and an election in which three directors will be selected.Why might shareholders care about which voting system is adopted?

All of the following are types of innovative bonds except:

What is the after-tax cost to a corporation in the 35 % tax bracket of paying $50,000 in preferred-stock dividends?

The value of retained earnings on the corporate balance sheet represents the amount of earnings:

Bonds with the callable feature sell at lower prices than bonds without such a feature.