1) Stock dividends and stock splits have the same impact on retained earnings.
2) Factoring accounts receivable, unlike pledging accounts receivable, typically passes
the risk of loss on the receivable to the buyer.
3) The advantage of a zero-coupon bond to an investor is that the annual increase in the
bond is taxable as ordinary income.
4) Accumulated depreciation should always be equal to the depreciation expense
charged in the income statement.
5) The degree of financial leverage measures the percentage change in EPS for every
1% move in EBIT.
6) Because a warrant is dependent on the market movement of an underlying stock, it is
highly speculative in nature.
7) If economic conditions were expected to be favorable, an investor would likely
prefer a firm with a low degree of leverage.
8) The “best efforts” method of underwriting is the most common method used in
issuances.
9) Stockholders of acquired firms in mergers tend to be more concerned with future
earnings and dividends exchanged than with the market value exchanged.
10) One of the primary benefits of implementing supply chain management is a
reduction in inventory on hand.
11) Many companies have cross-listed their stock on multiple international stock
exchanges and more than several hundred foreign companies have listed their shares on
the New York Stock Exchange.
12) Generally, the receipt of corporate bond interest is more valuable than preferred
dividends to corporate investors.
13) Capital markets consist of securities having maturities greater than one year.
14) Under cumulative voting, holding 30% of the shares outstanding will guarantee an
investor the ability to elect three of nine directors to the board.
15) Dividend reinvestment plans provide the stockholder with an opportunity to buy
additional shares of stock with the cash dividend paid by the company.
16) The largest source of short-term funds for most companies is suppliers (trade
credit).