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46. A corporation's net worth is composed of the:
47. Preferred stock dividends:
48. What tax liability is created by the receipt of $50,000 in preferred stock dividends by a
corporation in the 35% tax bracket?
49. Which one of the following statements about floating-rate preferred stock is correct?
50. Funded debt refers to those liabilities that:
51. The purpose of a sinking fund is to:
52. Warrants:
53. Which one of these terms applies to the bundling of a group of loans with the subsequent
sale of the cash flows from those loans?
54. Eurobonds are long-term, corporate liabilities that:
55. Bonds that have been sold only to a limited number of institutional investors are
considered:
56. Which one of these accounts is a source of internal funding?
57. A warrant grants its holder the right to do which one of these prior to a specified date?
58. What happens in the case of a bond selling for $1,000 that can be converted to 20 shares
of stock that are currently selling for $55 per share?
59. What happens in the case of a bond selling for $1,000 that can be converted to 20 shares
of stock that are currently selling for $45 per share?
60. Convertible bonds resemble a combination of which two types of securities?
61. What is the most commonly bundled type of loan in the asset-backed bond category?
62. Which one of the following statements is correct?
63. A corporation with funded fixed-rate debt might prefer floating-rate debt if it thought
that:
64. To state that net equity issues have been negative indicates that:
65. All of the following are true of retained earnings
except
:
66. Jay's Jams Inc. was just established with an investment of $5 million in stereo equipment.
Jay expects his company to generate $800,000 a year for the next 10 years, followed by $1 million
a year for the following 10 years. If Jay's cost of capital is 15%, find the market value and book
value of his company.
67. Wheat's Market just issued $350,000 of new common stock at a price of $20 a share.
How will this transaction affect the equity accounts on the firm's balance sheet if the par value is
$1 per share?
68. When new shares of stock are sold at a price greater than par value, the excess over par
is recorded as:
69. A firm just issued 15,000 new shares of stock with a market price of $14 per share and
par value of $2 per share. Which one of these correctly states the resulting change in the equity
accounts?
70. Corporations generally need shareholder approval to do which one of the following?
71. Why should managers assume they will receive a fair price for any new shares that their
firm issues?
72. The value of retained earnings on the corporate balance sheet represents the amount of
earnings:
73. Which one of the following statements is typically correct for a going-concern firm?
74. A company's board of directors is primarily an agent of the company's:
75. The system of electing a board of directors where each director is voted on separately is
known as:
76. A shareholder owning 100 shares of stock is voting for the board of directors who are
elected by cumulative voting. How many votes will the shareholder cast for Director "A" if four
directors are to be elected and the maximum number of votes are cast for "A"?
77. One way in which control of a corporation can be removed from the current board of
directors is to:
78. One common reason for issuing two distinct classes of common stock is to:
79. Which one of the following statements is correct concerning stock dividends?
80. What is the after-tax cost to a corporation in the 35% tax bracket of paying $50,000 in
preferred stock dividends?
81. Which one of the following statements is correct about a corporation in the 35% tax
bracket that can invest either in a bond paying 8% interest or in the preferred stock of another
corporation that pays a 6% dividend?
82. What is the rationale for saying that the federal government provides a tax subsidy to
corporate debtors?
