1) The future rates of currency tend to increase for dates further in the future because of
the increasing uncertainty over time.
2) A rapid payback may be important to firms having rapid technological development.
3) Cash break-even analysis eliminates the depreciation expense and other non-cash
charges from fixed costs.
4) Companies prefer to maintain some financing flexibility in order to choose the
lowest-cost source of funds at a single point in time.
5) A firm with a higher beta than another firm will have a higher required rate of return.
6) Regardless of the situation, no well-managed firm would borrow money to pay
dividends to stockholders.
7) Electronic funds transfer will likely increase the use of float.
8) If an asset is sold for a price above its book value, the difference is considered
taxable income to the firm.
9) The highest suppliers of funds to the U.S. credit markets are foreign investors.
10) When a firm that previously paid regular dividends ceases to do so, the stock is
ex-dividend until the firm resumes regular dividend payments.
11) Management should tailor the use of leverage to meet its own risk-taking desires.
12) A firm’s cash borrowing needs can be reduced if its inventory turnover rate can be
increased.
13) Political risk and labor unrest will tend to strengthen a country’s currency.
14) One purpose of an underwriting syndicate is to distribute securities to the public.
15) Non-mutually exclusive alternatives can be accepted at the same time.
16) The primary market includes the sale of securities by way of initial public offerings.
17) The “convertible exchangeable” feature of preferred shares gives the holder the sole
right to exchange their preferred stock for common stock.
18) Yield spreads between investment grade and junk bond ratings are usually greater
during economic boom periods.
19) Without financial intermediaries, the cost of funds would be about the same as with
financial intermediaries.