Question

6. The base rate of interest most often used by banks making U.S. dollar denominated loans outside the U.S. is:

A.The inter-country rate (ICR).

B.The London Inter-bank offering rate (LIBOR).

C.The Eurodollar rate (EDR).

9. A firm’s debt:

A. Makes no legal promises of repayment.B. Makes the lender an owner of the firms C. Is a legal obligation between a lender and the firm. D.Is represented by the shares of stock given to the lender

10. Debt investors:

A. Are promised a specific rate of return. B. Do not receive interest payments unless profits increase. C. Are given shares of stock in return for the money they invest. D. Share in the success of the firm.

10. the accuracy of a percentage of sales forecast depend on:

A. The accuracy of the sales forecast.

B. The stability of the relationships between sales and the firm’s other accounts.

C. Accurate identification of spontaneous and discretionary accounts.

D. All of the above.

12. Pro-forma financial statements are:

A. Financial statements that have been audited.

B. Financial statements that do not balance.

C. Projected financial statements.

D. Competitive financial statements.

Answer 1

6) B) the london inter- bank offering rate (LIBOR)

It is base interest rate used by financial institutions all over the world

9) C) Is a legal obligation between a lender and the firm

Debt of the firm is a legal obligation means if firm do not pay debt the lenders can take them to the court

10) A) Are promised a specific rate of return

Irrespective of profit, debt investor are paid interest at specific rate

11) D) All of the above

12) C) Projected financial statement

Pro forma are projected financial statement which indicate future earnings and projections