In a multiple regression model, the error term ? is assumed to
a. have a mean of 1
b. have a variance of zero
c. have a standard deviation of 1
d. be normally distributed
D
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Which of the following is/are not true?
a. Firms sometimes issue bonds with stock warrants attached and allocate the amount received between the bonds and the warrants based on their respective fair values. b. When firms issue convertible bonds U.S. GAAP requires firms to allocate the full issue price to the bonds and none to the conversion feature. c. IFRS requires firms to allocate the full issue price to the bonds and none to the conversion feature. d. Under IFRS, the firm allocates the issue price of bonds with terms similar to those issued but without the conversion feature to the bonds and the remainder of the issue price to the conversion option. e. all of the above
Discuss GAAP reporting of income transactions
A written contract needs at least one witness to establish its existence and its terms
Indicate whether the statement is true or false
Which of the following statements is CORRECT?
A. The sustainable growth rate is the maximum achievable growth rate without the firm having to raise external funds. In other words, it is the growth rate at which the firm's AFN equals zero. B. If a firm's assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm's AFN to be negative. C. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm's actual AFN must, mathematically, exceed the previously calculated AFN. D. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio. E. Dividend policy does not affect the requirement for external funds based on the AFN equation.