TRUE OR FALSE:1.A Financial Statement is not necessary forcorporations over $10M in annual revenue.2.It is possible to determine the future value(FV) of an investment deposit into fixedincome security.3. Investing in stock is a form of fixed incomeinvesting.

Financial statements are those statements which show the health and earnings of the company. There…

Answered: 1.A Financial Statement is not…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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If a company borrows more than it pays in interest. Select one: a.Cash flow to stockholders will be negative b.Cash flow to creditors will be negative O c.Cash flow to stockholders will be positive O d.Cash flow to creditors will be positive
D3)
Financing activities do not include cash outflows to O stockholders to repurchase common stock. O lenders to pay off long-term debt. O make loans to other entities. O stockholders as dividends.
When you invest your money, you want to avoid risk at all cost. Which type of investment would you MOST likely choose? O a) small-company stocks b) large-company stocks c) corporate bonds 0 d) Treasury bills
(a). Large businesses spend millions of dollars annually on insurance. Why? Should they insure against all risks or does insurance make more sense for some risks than others? (b). Why might firms prefer to fund investments using retained earnings or debt rather than issuing equity? (c). How does asymmetric information explain the negative stock price reaction to the announcement of an equity issue?
Consider an all-equity firm that is run by a manager who acts in the best interest of existing shareholders. The value of the firm's assets in place is either $50 or $210. The firm has an investment project that requires an investment of $45. The only way to finance this project is by issuing equity to new investors in a competitive stock market. The project generates a sure, risk-free cash flow of $50 next year (i.e. this cash flow does not depend on the value of assets in place). Everyone is risk neutral and there is no discounting. a. Suppose that everyone, including the manager, believes that the assets in place are worth $50 with probability ½ and $210 with probability 2. What fraction a of the firm's equity has to be issued to new investors to raise $45? Does the manager want to issue equity?
True or False (Please refer to the picture and answer all)
1. Cost of money Everyone uses money, and it is important to understand what factors affect the cost of money. Consider the following scenario: A friend comes to you and asks you to invest in his business instead of investing in Treasury bonds. You think he has a good business model, so you tell him you are willing to invest as long as the expected return on the investment is at least four times the return you would have received on the Treasury bonds. Determine which of these fundamental factors is affecting the cost of money in the scenario described: Risk Inflation Time preferences for consumption
37. Lis/are a way to raise capital by selling ownership or equity: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Seeking a Bank Loan 38. is/are a way to raise capital through borrowing: A. Issuing Stock B. Seeking Early-stage capital C. Issuing Bonds D. Developing profits E. Mutual Funds 39. If a firm's revenues are greater than costs, then the business would be considered:
o raise capital, what are the pros and cons of selling bonds, compared to issuing stock or borrowing money from a bank in terms of raising capital?
Give typing answer with explanation and conclusion
6. What are the realized returns for the stock market, for Small Companies, Large Companies; long term Bonds, Long Term Gov Bonds, and US T Bills? What investment portfolio would select (do not include names of mutual funds or stocks, just overall types of investments.)?

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1.A Financial Statement is not necessary for corporations over $10M in annual revenue. 2. It is possible to determine the future value (FV) of an investment deposit into fixed income security. 3. Investing in stock is a form of fixed income investing.