Equity financing is raising capital through borrowing. 2. A bond certificate is a contract of debt. 3. Stockholders are investees in a corporation. 4.
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True or False
1. Equity financing is raising capital through borrowing.
2. A bond certificate is a contract of debt.
3. Stockholders are investees in a corporation.
4.
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Solved in 3 steps
- True or False 1. The holder of the bond indenture is receiving interest income on a regular basis. 2. Loan from a bank is interest-bearing. 3. When a corporation raises capital through equity financing, it results to an increase in its equity. 4.Which one of the following is referred as debt finance? a. Purchase of T-Bills. O b. Sale of bonds. O c. Issue of equity shares С. d. Issue of Preference sharesTrue or False 1. In equity financing, the corporation is the investee, while the stockholders are the investors. 2. In equity financing, the corporation is the investee, while the stockholders are the investors. 3. Loan from a bank is interest-bearing. 4. When a corporation raises capital through equity financing, it results to an increase in its equity. 5. Equity financing is raising capital through borrowing.
- Which of the following statements about the characteristics of debt and equity is true? a. All of the statements are true b. They can both be long-term financial instruments. c. They both involve a claim on the issuer's income. d. They both enable a corporation to raise funds.The following are examples of debt financing EXCEPT: a. Selling an ownership stake in the company b. Issue bonds repayable with interest c. Taking a loan from the bank d. Taking a loan from a family member1. Differentiate stocks from bonds; and stockholders from bondholders. 2. Explain the components of capital (retained earnings, bonds, preferred equity and common equity) relative to weighted average cost of capital. 3. What are the factors affecting cost of debt? Define or explain each of them.
- True or False 1. In equity financing, the corporation is required to distribute dividends to its stockholders on a regular basis. 2. One of the company's sources of funds is its own accumulated earnings. 3. In a debt equity, there exists a debtor and creditor relationship. 4. Supplier's credit as a source of fund is advantageous both to the debtor and the creditor. 5. One can open a deposit account with a lending institution.1. Which of the following is a function of every financial market? A) It determines the level of interest rates. B) It allows common stock to be traded. C) It allows loans to be made. D) It channels funds from lenders-savers to borrowers-spenders. 2. Securities are for the person who purchases them, but they are for the person/firm who sells them. A) assets; liabilities B) liabilities; assets C) income; liabilities D) liabilities; expenses 3. Which of the following is/are money market instrument(s)? A) Negotiable certificates of deposits B) Common stock C) T-bonds D) 4-year maturity corporate bond 4. Who has voting rights at a shareholders' meeting? A) All common stock owners. B) Common stock owners who own more than 1% of the company. C) Only the company's managers. D) All preferred stock owners. 5. These are investments where shareholders become the owners of the portfolio of the account. These portfolios of securities could be made up of equity securities or debt securities. A)…One of the primary reasons for investing in debt securities includes a. Deducting interest payments for tax purposes.b. Receiving dividend payments.c. Earning interest revenue.d. Acquiring ownership control in other companies.
- Which of the following is not a capital market instrument? a. Corporate stock b. Mortgages c. Corporate bonds d. Repurchase agreementWhich one of the following is referred as Equity finance? а. a. Sale of money market instruments O b. Sale of bonds. О с O c. Purchase of T-Bills. O d. Issue of shares5. Which is correct about debt securities? a. Debt securities make the holders owners and give them the right to vote in all matters of the firm. b. Debt securities give the holders the right to receive interest and dividends. c. Debt securities give the holders the right to be elected as board of directors or to vote them. d. Debt securities give the holders the right to convert them into stocks if the indenture states. e. All of the above