Please I am asking you to help me with this prblems. 1. Which of the following s
ID: 2696818 • Letter: P
Question
Please I am asking you to help me with this prblems.
1. Which of the following statement about listing on a stock exchange is most correct?
a. Listing isa decision of more significance to a firm than going public.
b. Any firm can be listed on the NYSE as long as it pay the listing fee.
c. Listing provides a company with some free advertising and it may enhance the firm's prestige and help it to do more business
d. Listing reduces the reporting requirements for firms because listed firms file reports with the exchange rather than the SEC.
e. The OTC is the second largest market for listed stock and it is exceeded only by the NYSE.
2. The primary test of feasibility in a reorganization is whether the firm's fixed charges after reorganization can be covered by its projected cash flows. True of False
3. A central question that must be addressed in bankruptcy proceedings is whether the firm's inability to meet scheduled interest payments results from a temporary cash flow flow probelm or from potentially permanent problem caused by falling asset values.
True or False.
4. Which of the following statement is most correct
a. If new debt is used to refund old debt, the corrcet discount rate to use in the refunding analysis is the before -tax cost of new debt.
b. The key benefit associated with refunding debt are the reduction in the firm's debt ratio and the creation of more reserve borrowing capacity.
c. The mechanics of find the NPV odf a refunding decision are fairly straighforward. However the decision of when to refund is not always clear because it requires a forecast of future interst rates.
d. If a firm with a postive NPV refunding project delays refunding and interest rates rise the firm can still obtain the entire NPV by lockinh in a low coupon rate when the rate are low, even thought it actually refunds the debt after rates have risen.
e. Suppose a firm is considering refunding and interest rates rise during time when the analysis's is being done. The rise in rates would tend to lower the expeceted price of the new bonds, which would make them cheaper to the firm and thus increase the expected interest savings.
5. In the lease versus buy decision, leasing is often preferable
a. because it has no effect on the firm's ability to borrow to make other investment.
b. because, generally , no down payment is required and there are no direct interest costs
c. because lease obligations do not affect the firm's risk as seen by investors.
d. because the lessee owns the property at the end of the least term
e. because the lesse may have greater flexibility in abandoning the project in which the leased property is used than if the lesssee brought and owned the asssts.
6.In the event of bankruptcy under the federal bankruptcy laws, debtholders have a prior claim to a firm's income and assets before both common and preferred stockholders. Moreover, in a bankruptcy all debtholders are treated equally as a single class of claimants. True or False.
Explanation / Answer
1. a
2.True
3. True
4. c
5. b
6. False