Question

27. The _________________________ rate of interest is typically the required rate of return on a three-month...

27. The _________________________ rate of interest is typically the required rate of return on a three-month U.S. Treasury bill.

A) nominal

B) real

C) risk-free

D) premium

2) TRUE/FALSE The questions below

A)Preferred stock has a characteristic of debt financing since it provides a fixed, periodic cash payment.

B) Common stock gives the holder voting rights which permit selection of the corporation's Board of Directors.

C) The Gordon constant growth stock model is an approach to stock valuation that assumes that dividends grow at a constant annual rate (g) indefinitely.

D) In the case of liquidation, common stockholders are paid first, followed by preferred stockholders followed by bondholders.

Homework Answers

Answer #1

option c is the correct option for 27(1),(c) risk free rate. treasury bill are free from risk. It is the minimum rate receivable at any bond type.

27(2) (a) answer is true. For taking financial leverage preferred stock behave like debt fiancing due their character of fixed rate of interest.

(b) true, common stock holders are the owner of the entity and have voting rights to choose the Board of dirrects to mange the compnay.

(c) Ture

(d) false, common stock holders are the owner of the firm but in liquidation they are paid at the end of the residual value.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
With respect to voting rights, preferred stockholders typically Select one: a. have voting rights that are...
With respect to voting rights, preferred stockholders typically Select one: a. have voting rights that are preferable ( i.e., better) than the voting rights of common stockholders. b. have no voting rights, unless the firm fails to pay two consecutive quarterly dividends, at which point the preferred shareholders can elect a certain number of corporate directors. c. have one vote per shareholder, regardless of the number of shares they own. d. have the identical voting rights as common stockholders. Owning...
1. Which of the following statements about common stock voting is/are correct? I. Majority voting typically...
1. Which of the following statements about common stock voting is/are correct? I. Majority voting typically prohibits a group of stockholders with a minority viewpoint from having any representation on the board. II. Cumulative voting allows each share of stock to represent as many votes as there are directors to be elected. A. Only statement I is correct B. Only statement II is correct C. Both statement I and statement II are correct D. Neither statement I nor statement II...
4) The interest charged on a $150,000 note payable, at the rate of 5%, on a...
4) The interest charged on a $150,000 note payable, at the rate of 5%, on a 10-month note would be * a- $6,250 b- $2,500 c- $1,000 d- $7,500 5) Beng Company has 30,000 shares of $1 par common stock issued and outstanding. The company also has 5,000 shares of $100 par 5% noncumulative preferred stock outstanding. The company did not pay the preferred dividends in 2019. On December 1, 2020 the company’s board of directors declared that $250,000 will...
If you are saving $ 150 per month, and receive 2.5 % interest compounded continuously on...
If you are saving $ 150 per month, and receive 2.5 % interest compounded continuously on your savings, how much will you have at the end of 10 years? _______________________ 2) If you had purchased some furniture for $6,500, to be repaid over 24 months at 13.5% interest compounded monthly, and wanted to pay it off after the 3rd. payment, how much would you still owe? ­­­­­­­­­_______________________ 3) If you won the lottery, and were told you would get $...
Sam Forbes and Jenny Hewes are senior vice-presidents of the First Creek Investment Council . They...
Sam Forbes and Jenny Hewes are senior vice-presidents of the First Creek Investment Council . They are co-directors of the company's pension fund management division, with Sam having responsibility for fixed income securities (primarily bonds) and Jneey being responsible for equity investments. A major new client has requested that council present an investment seminar to Executive Committee, and Forbes and Hewes, who will make the actual presentation, have asked you, a recent UCW graduate to help them.                                                                                                                                                                 ...
CRITICAL THINKING QUESTION Please read the case study below on the differences between equity and liabilities....
CRITICAL THINKING QUESTION Please read the case study below on the differences between equity and liabilities. Decide whether the Class A common (ie. ordinary) shares may be disclosed as part of shareholders’ equity. Explain the application of relevant passages from AASB 132 and the Conceptual Framework to the Class A Common Shares, making specific connections between wording in in the standards and framework with the features of the shares. Using the AREA framework, do you agree or disagree with the...
What role could the governance of ethics have played if it had been in existence in...
What role could the governance of ethics have played if it had been in existence in the organization? Assess the leadership of Enron from an ethical perspective. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among the top Fortune 500 companies, collapsed in 2001 under a mountain of debt...
Discuss ethical issues that can be identified in this case and the mode of managing ethics...
Discuss ethical issues that can be identified in this case and the mode of managing ethics Enron finds itself in this case. How would you describe the ethical culture and levels of trust at Enron? Provide reasons for your assessment. THE FALL OF ENRON: A STAKEHOLDER FAILURE Once upon a time, there was a gleaming headquarters office tower in Houston, with a giant tilted "£"' in front, slowly revolving in the Texas sun. The Enron Corporation, which once ranked among...