In the context of choosing a share repurchase over declaring dividends, a share repurchase would
1. In the context of choosing a share repurchase over declaring dividends, a share repurchase would
a. Decrease available financing whereas declaring dividends increase available financing.
b. Increase earnings per share by decreasing the number of shares outstanding.
c. Decrease earnings per share by decreasing dividends payable
d. invlove all shareholders.
2. XYZ Corp. raised P50 million from bonds and P110 million from ordinary shares. It invested P150 million of these into operating assets. Subsequently, XYZ was offered a project that is similar to its operations but requires a higher level of insurance coverage. This would require P10 million in invested capital. What is the most likely discount rate to be used for evaluating this project?
a. Weighted average cost of capital
b. A project-specific rate which is the adjusted incremental cost of capital
c. Incremental cost of capital
d. A project-specific rate which is the adjusted weighted average cost of capital
3. During the first five years after incorporation, the entity did not declare dividends and funnels most cash to long-lived assets and R&D. When sales were starting to rise, small dividends were declared. This is supportive of which dividend theory?
a. Residual Theory
b. Trade-off Theory
c. Dividend Signaling Theory
d. Life Cycle Theory
4. A bond has a nominal interest rate of treasury bond rate plus 5%. This same bond requires the entity to have its investment property as collateral. This would indicate that it is a/an *
a. Equipment trust bond with a fix rate
b. Mortgage bond with a variable rate
c. Equipment trust bond with a variable rate
d. Mortgage bond with a fix rate
5. As a micro-enterprise, which sets of financing are the most likely to be used?
a. Banks and venture capitalists
b. Tax holidays and leases
c.
d. Public issuance of equity and debt
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