Answer the following statements true (T) or false (F)
1. The market rate is the rate used to calculate the actual cash payments made to bondholders.
2. Financial leverage occurs when a company earns less income on borrowed money than the related interest expense.
3. Unlike cash dividends, which are optional payments to stockholders, the interest payments on bonds are required.
4. Debt is a less expensive source of capital than stock.
5. Bonds affect the percentage of ownership of a corporation.
1. FALSE - Explanation: The stated rate is the rate used to calculate the actual cash payments made to
bondholders.
2. FALSE - Explanation: Financial leverage occurs when a company earns more income on borrowed
money than the related interest expense.
3. TRUE
4. TRUE
5. FALSE
You might also like to view...
During the performing stage of team development, the group answers the question
A. "Can we agree on roles and work as a team?" B. "Why are we here?" C. "Why are we fighting?" D. "Who's in charge?" E. "Can we do the job properly?"
Which of the following is NOT a component of the oral group report?
a. An introduction b. A body c. A conclusion d. A Q&A session
A company is interested in monitoring the average time it takes to serve its customers. An appropriate control chart would be:
A) an chart. B) a p-chart. C) a c-chart. D) an R-chart.
Discuss the effect of Title VII of the Civil Rights Act of 1964 on employment opportunities for minorities. Are the effects similar to those of the Age Discrimination and Employment Act?
What will be an ideal response?