Short-term borrowing by large Blue-Chip companies in the form of IOUS is called O commercial paper O treasury bills treasury bonds O tax exempts
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- K What is the term used for a short-term, unsecured debt sold by a large company to investors without using an intermediary? A. unsecured paper B. direct paper OC. junk bond OD. dealer paper O E. commercial paper O PoirWhich of the following are issued by large commercial banks that can be bought and sold among investors and carry a fixed interest rate? a. Eurodollar CD O b. Certificate of Deposits c. Commercial Papers d. Treasury BillsThe RBA decides to buy bonds and securities from commercial banks on the open market. Other things being equal, this will result in a(n) _________ in the price of financial assets. short term increase, but longer-term fall increase decrease short term decrease, but longer-term rise no change
- *this is all one question* 25) a. Why is commercial paper an alternative to short-term bank borrowing for a corporation?b. What is the difference between directly placed paper and dealer-placed paper?c. What does the yield spread between commercial paper and Treasury bills of the same maturity reflect?d. Why does commercial paper have a maturity of less than 270 days?e. What is meant by tier-1 and tier-2 commercial paper?1. Which of the following is not a way in which banks lend short-term unsecured loans? Choices: By sending the amount earned from trust and investment products offered by the bank Through a guaranteed credit line that has a commitment fee for any unused amount for the year Through credits cards lines with a certain credit limit By lending a single date maturity loan to a debtor 2. The following are methods of acquiring funds through long-term financing, except Choices: Issuing bonds with semi-annual coupon payment at a discounted price Selling equity securities at an amount above the par value indicated in the stock certificate Issuing a note that indicates a promise to pay the indicated supplier in a future date Selling equity securities with a characteristic of both debt and equity security 3. Which is false about long-term sources of a firm's capital? Choices: Preferred shares are securities whose intrinsic value is based on prospective earnings All types of…Commercial paper markets are trading a. Municipal bonds b. Private company bonds c. Federal Reserve bonds d. Treasury bonds For a commercial bank, to calculate its profitability we may look at a. Equity Ratio b. Return on assets c. Return on investment d. US Treasury bond holdings
- Zero coupon bonds: O a. create annual taxable income to individual bondholders. O b. create a tax deduction for the issuer only at maturity. O care issued only by the U.S. Treasury. O d. are issued at a premium. O e. are valued using simple interest.Debt Securities - These securities are in the form of debt or borrowings which have to be repaid by the issuer to the holder of the securities. The issuers of debt securities have to pay interest in the form of coupons at a rate of interest. Debt securities are a means of diversification and provide a predictable income stream to the holders. You mention "coupons" in you debt instrument discussion. Can you tell us more about these coupons? How do they work, where do we find them? Are they registered?Which of the following statements about Floating-Rate Debt is NOT true? A) Floating-rate debt has a stated interest rate that fluctuates in tandem with some interest rate benchmark (for instance, LIBOR). B)Floating-rate bonds allow companies to keep reported book value and fair value at the same level that protects investors from losses. C)The issuing company benefits from floating-rate debt when market interest rates increase. D)Floating-rate debt is issued at par.
- la bonitob at bloky enig (7.8) The interest rate investors expect on a new bond issue can be determined by computing the for the company's Alternatively, it is possible on newly to determine the cost of new debt financing by finding the issued bond with similar (7.9) The firm's overall measure of the cost of capital is the cost of debt is the The dollar cost of equity is overall firm average cost of capital is the cost of equity plus the cost of debt, divided by The dollar (7.10) Interest (is / is not) a tax-deductible expense, and dividends paid to stockholders (are / are not). The payment of interest reduces the firm's taxes by after-tax cost of debt in dollars equals The after-tax cost of debt in percentage terms is WACC = dito The TheLoans are collateralized to:a increase returnsb increase liquidityc reduce concentration riskd all of the above Contingency liquidity support includes:a sale of short term securitiesb repo agreementsc secured line of credit from another financial institutiond sale of equityItem 9 of 25 Which of the following financial instruments generally provides the largest source of short-term financing for small firms? Select the correct response: mortgage bonds installment loans trade credits commercial paper
