When a convertible bond is called, the bondholder must convert the bond or lose the
appreciation achieved by the stock.
If accounts receivable are collected, the quick ratio increases.
Preferred stock dividends are not a legal obligation of the firm.
Generally, convertible bonds lack a call provision.
Put and call options are bought and sold (i.e., are traded) in secondary markets.
There is no risk in a world of certainty.
If goods cost $100 and the terms of credit are n30, the firm has 30 free days use of the
goods.
You want to start a firm whose output you believe you can sell for $25 per unit. The
operation will require fixed costs of $10,000, and the variable costs are expected to be
$18 a unit. What will be the break-even level of output?
During a period of recession, the Fed sells securities.
If a firm needs additional equity financing through the retention of earnings, it may be
advantageous to incorporate.
If a firm sells inventory at cost for cash, its total assets rise.
Both lease payments and depreciation are tax deductible expenses for the lessee.
The safety stock is the maximum amount of inventory that the firm should seek to
carry.
If a person owes $50,000 at 10 percent and annually pays $10,000, the loan will be
retired in 5 years.
In an underwriting the managing house forms the syndicate.
The value of stock depends in part on future dividends and investors’ required return.
When a stock index futures contract expires, the buyer takes delivery of the securities.