The Rumpel Felt Co. was all equity financed. It recently borrowed money and used the funds to repurchase shares. The stock price rose as a result. Which of the following explains the increase in stock price?
I. The tax shields generated by the new debt
II. A reduction in agency costs due to the interest on the debt
III. A generous premium included in the repurchase price
A) I only
B) II only
C) III only
D) I and II
E) I and III
D
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Flagg Company issued $500,000 of bonds for $498,351, Interest is paid semiannually. The bond markets and the financial press are likely to state the bond issue price as
a. 498.35. b. 100.00. c. 99.67. d. 49.84.
Jake has asked Len to be a primary investor in his entrepreneurial start-up. Len first wants to carefully study Jake's business plan, in particular these key factors:
A. the clients, the opportunity, the competition, the context, and the risk/reward. B. the people, the threats, the partners, the context, and the risk/reward. C. the people, the other investors, the suppliers, the context, and the opportunities/threats. D. the clients, the other investors, the suppliers, the context, and the opportunities/threats. E. the people, the opportunity, the competition, the context, and the risk/reward.
Why do you think that many biotechnology firms license their new products?
What will be an ideal response?
(I) Banks are financial intermediaries that accept deposits and make loans
(II) The term "banks" includes firms such as commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, and pension fun A) (I) is true, (II) false. B) (I) is false, (II) true. C) Both are true. D) Both are false.