The maximum reward for owning a debt security is Blank______, and the maximum reward for owning equity is Blank______.  Multiple choice question. fixed, fixed unlimited, fixed fixed, unlimited unlimited, unlimited

Debt will always have a cost basis that is less than equity. OA. True B. False

A secured line of credit: Select one: a. is backed up by pledged assets b. is not backed up by pledge assets c. has a higher interest rate than an unsecured line of credit d. has a lower limit than an unsecured line of credit

The present value of a single payment can be represented as ____.   a. PV0 = FVn(PVIFi,n)   b. PV0 = FVn(PVIFAi,n)   c. PV0 = FVn[1/(1 - i)n]   d. None of these are correct

Use IFRS 9 to determine how to subsequently measure the following financial assets.  Three choices of measurement basis are amortized cost, fair value through other comprehensive income, and fair value through profit or loss.  Provide justification for your choice. Long-term loans that are held for collecting contractual cash flows till their maturities, but may be subsequently sold if the loans’ credit risk substantially increases. Investments in bonds that are held for collecting contractual cash flows, and may be subsequently sold to re-invest the cash in financial assets with a higher return. Subprime (high risk) mortgage loans that were originated by a mortgage-broker firm that always sell these loans to banks right after their origination. Forward contracts that an EU bank purchased to hedge the exposure to changes in fair value of US$-denominated loans. Investment in bonds that are convertible into common stock of the bond issuer. Investment in bonds that pay a variable market…

True or false: The expected return on a security or other asset is equal to the sum of the possible returns multiplied by their probabilities. True false question. True False

6. Use the provided chart to solve this problem.

Loans and receivable should be measured subsequent to initial recognition at *   a. Amortized cost using the straight line method b. Fair value c. Fair value plus transaction cost d. Amortized cost using the effective interest method

Leverage is gained when which of the following exists? O Return on assets is greater than the interest on borrowed funds O Interest coverage ration is greater than 1 O Interest coverage ratio is less than 1% O Interest on borrowed funds is greater than the return on assets

The maximum rate of return needed to induce an investor to purchase or hold a security is referred to as the investor's required rate of return. OTRUE. FALSE