Does the equity holder in Power Finance deemed to have decision-making ability? Multiple Choice No because the outside investor will provide $16 million in exchange for a 100 percent nonvoting equity interest in Power Finance. No because Twin Peaks does not have power to direct Power Finance's activities. Yes because the outside investor will provide

Does the equity holder in Power Finance deemed to have decision-making ability? Multiple Choice No because the outside investor will provide $16 million in exchange for a 100 percent nonvoting equity interest in Power Finance. No because Twin Peaks does not have power to direct Power Finance's activities. Yes because the outside investor will provide

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Which of the following scenarios does a donated capital arise? * Forgiveness of an existing loan from the government An equipment from a manufacturer Shares donated by a shareholder to the corporation Financial aid from the government Which of the following is true about share split? * It increases the total number of outstanding shares It increases the aggregate par value of shares It decreases the retained earnings of the corporation All of the above.
I. Directions: Write TRUE if the statement is correct; write FALSE if the statement is wrong. Write your answer on the space provided af ter each number. _1. Equity funding involves repayment. _2. The primary disadvantage of equity funding is that the firm's owners relinquish part of their ownership interest and may lose some control. _3. Return on equity depends on company's earnings. _4. Debt financing gives privilege of ownership in a company. _5. When an entrepreneur financed his/her business with debt, lender has the right to tel him/ her how to run a business. _6. When an entrepreneur financed his/ her business with debt, payments are unpredictable and he/ she has no idea what needs to pay every month to pay off the loan. _7. When an entrepreneur financed his/ her business with debt, he/she keeps al the profits. _8. The lender can force the entrepreneur into bankruptcy if he/she cannot pay his/ her loan payments. _9. To force a borrower into bankruptcy for not making their loan…
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