Suppose a company is choosing between bank loans and bonds. The interest rate in the bank loan is 3.5%, and an investment bank predicted that the company will pay close to 4% to issue a bond with the same maturity. In addition, fees are estimated to be higher for the bond issuance than for the bank loan. Explain why this company may still decide to issue the bond rather than borrowing through a bank.

Suppose a credit analyst for JPMorgan Chase, an American multinational financial services company headquartered in New York City and the world's largest bank by market capitalization, is considering a proposal to extend a short-term, one-month loan to Apple, Inc., an American multinational technology company headquartered in Cupertino, California. Which of the following financial statement ratios would best help the credit analyst assess Apple, Inc.'s ability to repay the short-term loan? O Days' sales in receivables. O The cash ratio. O The current ratio. O The return on equity ratio (ROE).

Which of the following statements is true about banks?(Choose an answer from the list below; only one  is correct.) Reference: Chapter 11 and/or slides for class discussion. Group of answer choices They hold ALL of their customers deposits in the form of cash or government bonds. They are NOT allowed to set the interest rates at which they lend, interest rates on products like mortgages are set by the Federal Reserve or by another of their regulators. They act as an intermediary for borrowers and savers by taking in DEPOSITS and using them to make LOANS. They are owned and operated by the government and are not permitted to make a profit.

When firms enter into loan agreements with their​ bank, it is very common for the agreement to have a restriction on the minimum current ratio the firm has to maintain. ​ So, it is important that the firm be aware of the effects of their decisions on the current ratio. Consider the situation of Advanced Autoparts​ (AAP) in 2009. The firm had total current assets of $1,907,570,000 and current liabilities of $1,362,550,000.   a.  What is the​ firm's current​ ratio? b.  If the firm were to expand its investment in inventory and finance the expansion by increasing accounts​ payable, how much could it increase its inventory without reducing the current ratio below 1.2​? c.  If the company needed to raise its current ratio to 1.5 by reducing its investment in current assets and simultaneously reducing accounts payable and​ short-term debt, how much would it have to reduce current assets to accomplish this​ goal?       Question content area bottom Part 1 a.  What is the​ firm's…

The company's bank won't lend it any more money than it already has, and investment bankers have said that debentures are out of the question. The treasurer has asked you to do some research and suggest a few ways in which bonds might be made attractive enough to allow the company to borrow. Explain how to secure the bonds with owned assets in great detial. In what ways does it make the bonds more attractive to allow  the company to borrow?

How does the interest paid on U.S. savings bonds compare to the savings account rates paid by banks and credit unions? A.The interest paid on U.S. savings bonds is higher than the savings account rates paid by banks and credit unions. B.The interest paid on U.S. savings bonds is lower than the savings account rates paid by banks and credit unions.  C.The interest paid on U.S. savings bonds is twice as much as the savings account rates paid by banks and credit unions. D.The interest paid on U.S. savings bonds is the same as the savings account rates paid by banks and credit unions.

The time value of money is used in calculating bond prices because: Group of answer choices A - The company might choose to repay the bonds prior to their maturity date B - Bond investors receive future payments and purchase bonds with current dollars C - The amount to be repaid at maturity will change as market rates change D - Cash interest payments to bondholders will change as market rates change

Which of the following trends can be unfavorable from the viewpoint of a bondholder? a. The issuing company’s debt ratio is steadily declining.b. The issuing company’s interest coverage ratio is steadily rising.c. Market interest rates are steadily rising. d. The issuing company’s net cash flow from operating activities is steadily increasing.

Fleeson Company needs additional funds to purchase equipment for a new production facility and is considering either issuing bonds payable orborrowing the money from a local bank in the form of an installment note. How does an installment note differ from a bond payable?

Loptech, a technology firm, wants to issue bonds for investment purposes. Loptech has one of the best credit ratings in the industry. Market rates for debt instruments average at .5% interest. Based on its credit rating, Loptech would likely sell bonds that pay _____. A. Indeterminable with current information B. 0.25% C. 0.5% D. 0.75%