Financial Management - Study Mode
[#181] The cost of capital of a long term debt is generally.
Correct Answer
(D) Higher than that of owned funds
Explanation
Solution: The cost of capital of a long term debt is generally Higher than that of owned funds. Cost of capital refers to the opportunity cost of making a specific investment. It is the rate of return that could have been earned by putting the same money into a different investment with equal risk.
[#182] Which of the following would not be considered as capital market security?
Correct Answer
(C) A 6-month Treasury bill
Explanation
Solution: A 6-month Treasury bill would not be considered as capital market security. A Treasury Bill (T-Bill) is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less.
[#183] Net working capital is the excess of current asset over ____________.
Correct Answer
(A) Current liability
Explanation
Solution: Net working capital is a liquidity calculation that measures a company’s ability to pay off its current liabilities with current assets.
[#184] The coupon rate is another name for the__________.
Correct Answer
(C) stated interest rate
Explanation
Solution: Coupon rate is the rate of interest paid by bond issuers on the bond's face value. It is the periodic rate of interest paid by bond issuers to its purchasers.
[#185] Dividends are paid________________.
Correct Answer
(D) yearly
Explanation
Solution: Dividends are paid yearly. A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits.