8- which of the following can be described as involving indirect finance? Please select one; a) A Corporation buys commercial paper issued by another corporation b) A Corporation buys commercial paper in a secondary market c) A Corporation takes out loans from a bank d) all of the above e) only a and b of the above

8- which of the following can be described as involving indirect finance? Please select one; a) A Corporation buys commercial paper issued by another corporation b) A Corporation buys commercial paper in a secondary market c) A Corporation takes out loans from a bank d) all of the above e) only a and b of the above

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 5QE: Assume that a corporation needs to enter the private debt market to raise funds for plant expansion....

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Which of the following can be described as involving indirect finance? a. People pay premiums to an insurance company b. A corporation issues new shares to people c. People lend money to their friends d. People buy bonds from companies
9. The choice of the proper mixture of debt and equity, used to finance a corporation, is also referred to as the A. capital budgeting decision.B. capital structure decision.C. investment decision.D. liquidity decision. 10. As a legal entity, a corporation can perform the following functions EXCEPT: A. voteB. borrow money, lend money, sue and be sued, and vote.C. borrow money and lend money.D. borrow money, lend money, and sue and be sued. 12. A firm's investment decision is also called its A. liquidity decision.B. financing decision.C. leasing decision.D. capital budgeting decision. 13. A corporation, potentially, has infinite life because it A. has the same ownership and management.B. is a legal entity.C. is closely regulated.D. has limited liability.
Assume that a corporation needs to enter the private debt market to raise funds for plant expansion. The corporation expects debt covenants to place restrictions on the levels of its current ratio and total-liabilities-to-assets ratio. Considering the accounts that comprise these ratios, give examples of accounting estimates, accounting judgments, and structured transactions that the lender should examine closely.
1. An advantage to a corporation of issuing bonds rather than issuing stock or borrowing from a bank include(s) a. All of the below are true b. Interest on bonds is tax deductible, but dividends are notc. Bondholders have no voting rights or ownership of the corporationd. Bank lenders often demand a huge amount of annual information and place onerous restrictions on the business
Which of the following statements correctly describes the nature of indirect financing as discussed in lectures? Group of answer choices A) It is the source of financing whenever an investor purchases shares that are listed on the Australian Securities Exchange. B) May involve an individual investor buying shares in a company when a company goes public via an initial public offering. C) More than one of the other answers is correct D) None of the other answers is correct E) It relies upon an intermediary to facilitate the flow of funds from surplus to deficit units, unlike direct financing
Which of the following statements about the characteristics of debt and equity is true? a. All of the statements are true b. They can both be long-term financial instruments. c. They both involve a claim on the issuer's income. d. They both enable a corporation to raise funds.
Which of the following is not primary reason why corporation invest in debt . Select one: a. they are required by law b. they wish to move into new market c. they have excess cash d. they wish to gain control of competitor
8. Which of the following is FALSE about debt? A) Private debts include bank loans and private placements. B) Corporate bond issuance is similar to equity issuance, both requiring hiring underwriter(s). C) A company cannot issue corporate bonds unless it becomes public listed on a stock exchange first. D) A loan to a firm can be syndicated by multiple banks.
The primary objective of every banking company is: a. To earn maximum profits out of its investments b. To earn maximum profits out of issuing bonds to public c. To earn maximum profits out of its borrowing and lending operations d. To earn maximum profits out of selling of its tangible properties
19. _____________ are the financial intermediaries between those who have surplus money and those who need money. a. Financial markets b. Public institutions c. None of the options d. Private firms
20- Which of the following Institutions are compensated via commission after the transaction has been successfully completed for buying or selling securities? a. Brokerages b. Investment Company c. Insurance Companies d. Savings and Loans Association
Item 3 Which private company would benefit from using ASPE rather than IFRS? Multiple Choice company with a control block who owns the majority of the business company with operations internationally company interested in debt/equity financing in the external market company whose parent company is a major public corporation