A company that increases its liquidity by holding more cash and marketable securities is
A) likely to achieve a higher return on equity because of higher interest income.
B) going to have to sell common stock to raise the cash to become more liquid.
C) going to maximize firm value because risk is decreased.
D) likely to achieve a lower return on equity because of the smaller rates of return earned on cash
and marketable securities compared to the firm's other investments.
D
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Neville Company issued $100,000 of 6%, 10 year bonds when the market rate of interest was 5%. The proceeds from this bond issue were $107,732 . Using the effective interest method of amortization, which of the following statements is true? Assume interest is paid annually
a. Interest payments to bondholders each period will be $6,464. b. Interest payments to bondholders each period will be $5,000. c. Amortization of the premium for the first interest period will be $1,226. d. Amortization of the premium for the first interest period will be $613.
The level of discretionary costs
a. are set by management for one period at a time. b. cannot be changed in the short run. c. are determined when capital investment is undertaken. d. always varies with sales.
Debiting the cash account, will increase the account
Indicate whether the statement is true or false
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Answer the following statement true (T) or false (F)