1. A type of risk that relates to the changes in the market value of commodities that diminishes the power of money in relation to its ability to purchase goods and services. A. Default risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk 2. Bonds, a source of long-term financing, are long-term debt instruments. They are similar to term loans, except that they ae usually offered to the public and sold to many investors. Among the advantages (to the issuer) of issuing bonds are as follows, except A. Cost of debt is limited- bondholders usually do not participate in the superior earning of the firm. B. Interest paid on debt (bonds) is tax deductible C. Debt adds risk to a firm D. Basic control of the firm is not shared with the debt holders. 3. Cost of capital is the: A. amount the company must pay for its plant assets. B. dividends a company must pay on its equity securities. C. cost the company must incur to obtain its capital resources. D. cost the company is charged by investment bankers who handle the issuance of equity or long-term debt securities.
1. A type of risk that relates to the changes in the market value of commodities that diminishes the power of money in relation to its ability to purchase goods and services. A. Default risk B. Interest-rate risk C. Purchasing power risk D. Liquidity risk 2. Bonds, a source of long-term financing, are long-term debt instruments. They are similar to term loans, except that they ae usually offered to the public and sold to many investors. Among the advantages (to the issuer) of issuing bonds are as follows, except A. Cost of debt is limited- bondholders usually do not participate in the superior earning of the firm. B. Interest paid on debt (bonds) is tax deductible C. Debt adds risk to a firm D. Basic control of the firm is not shared with the debt holders. 3. Cost of capital is the: A. amount the company must pay for its plant assets. B. dividends a company must pay on its equity securities. C. cost the company must incur to obtain its capital resources. D. cost the company is charged by investment bankers who handle the issuance of equity or long-term debt securities.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter6: Accounting Quality
Section: Chapter Questions
Problem 4QE
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1. A type of risk that relates to the changes in the market value of commodities that diminishes the power of money in relation to its ability to purchase goods and services.
A. Default risk
B. Interest-rate risk
C. Purchasing power risk
D. Liquidity risk
2. Bonds, a source of long-term financing, are long-term debt instruments. They are similar to term loans, except that they ae usually offered to the public and sold to many investors. Among the advantages (to the issuer) of issuing bonds are as follows, except
A. Cost of debt is limited- bondholders usually do not participate in the superior earning of the firm.
B. Interest paid on debt (bonds) is tax deductible
C. Debt adds risk to a firm
D. Basic control of the firm is not shared with the debt holders.
3. Cost of capital is the:
A. amount the company must pay for its plant assets.
B. dividends a company must pay on its equity securities.
C. cost the company must incur to obtain its capital resources.
D. cost the company is charged by investment bankers who handle the issuance of equity or long-term debt securities.
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