1) If we ignore bankruptcy and agency costs then the optimal capital structure for a firm
under the moderate view would be 100% debt.
2) Terms of sale are frequently changed by the financial manager in order to increase
sales.
3) The future value of an annuity due is greater than the future value of an otherwise
identical ordinary annuity.
4) Because financial markets can be extremely volatile, with bond and stock prices
changing significantly from day to day, a firm’s management has much greater control
over the firm’s operating leverage than over its financial leverage.
5) When the corporation sells securities directly to the investment public without
involving an investment banker, it is called a privileged subscription.
6) Variation in a company’s income stream results from its choice of business line, its
choice of an operating cost structure, and its choice of a capital structure.
7) A project that is very sensitive to the selection of a discount rate will have a steep net
present value profile.
8) A company with negative net income will also have negative operating cash flow.
9) The negotiated purchase is the most prevalent method of securities distribution in the
private sector.
10) Seasonality is introduced into financial ratios by averaging monthly account
balances, and thus it is recommended that ending account balances be used.