A Firm With Spare Cash
Question: Are the following capital budgeting or financing decisions?
Intel decides to spend $7 billion to develop a new microprocessor
b.BMW borrows €350 million from Deutsche Bank
Answer: a- capital budgeting decision
b- financing decision
Question:
Answer: c- capital budgeting decision
d- capital budgeting decision
e-both
Question:
Answer: real, executive planes, brand names, financial, bonds, capital budgeting, investment, fianancing
Question: The primary goal of any company should be to maximize current period profits. True or false
Answer: false
Question: When a corporation fails, the maximum that can be lost by an individual shareholder is:
A. the amount of their initial investment.
B. the amount of their share of the profits.
C. their proportionate share required to pay the corporation’s debts.
D. the amount of their personal wealth.
Answer: A. the amount of their initial investment.
Question: The legal “life” of a corporation is:
a-coincidental with that of its CEO.
b-equal to the life of its board of directors.
c-permanent, as long as shareholders don’t change.
d-permanent, regardless of current ownership.
Answer: -permanent, regardless of current ownership.
Question:
Answer: B. should pay it out to shareholders unless the firm can earn a higher rate of return on the cash than the shareholders can earn by investing in the capital market.
Question: What are the key differences between mutual funds and hedge funds?
Answer: Hedge funds are lightly regulated and risky, it is for wealthy or institutional investors & managers are paid by performance
Mutual funds pay a fixed % of managed assets. Manage more money that hedge funds
Question: commercial bank
Answer: Commercial banks are major sources of loans for corporations. -They accept deposits and lend money to individuals, businesses, and other organiza5ons.
Question: Liquidity
Answer: the ease with which an asset can be converted into cash
ex- marketable securitites