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Describe the matching approach for meeting the financing needs of a company. What is the primary difficulty in implementing this approach?
Describe the five Cs of credit used in evaluating the creditworthiness of a credit applicant.
Describe the different ways in which capital can be transferred from suppliers of capital to those who are demanding capital.
Describe the differences between country risk and political risk. What is sovereign risk?
Describe the concept of market efficiency. In what sense is this concept an important part of the shareholder wealth maximization objective?
Describe some of the measures used by companies to discourage unfriendly takeover attempts.
Define each of the following terms: Capital structure; business risk; financial risk. Operating leverage; financial leverage, breakeven point
Define cash conversion cycle (CCC). Explain why, holding other things constant, a firm's profitability would increase if it lowered its CCC.
Define and describe the difference between the operating cycle and cash conversion cycle for a typical manufacturing company.
Define and discuss the function of collateral in short-term credit arrangements.
Compare the potential for agency problems in sole proprietorships, partnerships, and corporations. In light of your analysis, why is the corporate form of organization so popular?
Briefly describe the current international monetary system. What are the different types of exchange rate systems?
Briefly describe each of the following financial institutions: commercial banks, investment banks, mutual funds, hedge funds, and private equity companies.
The company's assets are financed with some combination of long-term debt and common equity. What is the company's debt ratio?
Baker Brothers has a DSO of 40 days. The company's average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year.
Assume that both portfolios a and b are well diversified? that E(rA)=12% and E(rB)=9%. If the economy has only one factor and beta=1.2 whereas beta=.8, what must be the risk-free rate?
Are liquidations likely to be more common for public utility, railroad, or industrial corporations? Why?
As the difference between the costs of short- and long-term debt becomes smaller, which financing plan, aggressive or conservative, becomes more attractive?
Against what types of risks should a wealth-maximizing firm try to purchase insurance? What types of risks should be self-insured?
A mortgage company offers to lend you $85,000; the loan calls for payments of $8,273.59 per year for 30 years. What interest rate is the mortgage company charging you?
A 6-year bond pays interest of $80 annually and sells for $950. What are its coupon rate, current yield, and yield to maturity?
If the firm has a target capital structure of 70% equity, and 30% debt, the firm's optimal dividend payout ratio (assuming only retained earnings will be used) under the residual model is?
Mallard has lease total lease payments of $ 120,000 and sinking fund payments totaling $ 100,000. Using the information from "A" and "B" above, their fixed coverage charge ratio is?
The city will pay for the supplies from available expendable financial resources. What is and shows the appropriate journal entry needed to record this information?
The risk-free rate is 8%, the average market return is 12%, and the projects's beta is 1.5. The project's NPV is?