The term structure of interest rates states that
A) terms of the loan have major effects on the interest rate.
B) the long term interest rate is the geometric mean of the series of short term rates covering the same period.
C) the long term rate would be higher than the individual short term rates in a rising interest rate environment.
D) Both B and C are correct.
Answer: D
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The most frequently used source of funds for start-ups is:
A. bank loans. B. credit cards. C. SBA loans. D. the entrepreneur's personal funds.
Dhani is the beneficiary of a life insurance policy on Elmo's life obtained from Famous Insurance Company. The insurer of this policy is
A. Dhani. B. Elmo. C. Famous. D. the agent or broker through whom the policy was obtained.
?For installment loans, the maturity date is:
A. ?the date on which the last installment payment is due. B. ?the date on which the market interest rate rises above the coupon rate. C. ?the date on which the coupon rate rises above the market interest rate. D. ?the date on which the first installment payment is due. E. ?the date on which the last coupon interest payment is made to the bondholders.
Which of the following is a disadvantage of debt financing?
A. It requires firms to sell stock to new investors to acquire additional funds. B. It requires firms to make fixed payments. C. It does not yield any tax benefits. D. It forgoes the opportunity to use financial leverage.