Question :
51. Firms typically borrow from banks, insurance companies, and other financial : 1245692
51. Firms typically borrow from banks, insurance companies, and other financial institutions by signing a note, which specifies the terms of the borrowing arrangement. The initial valuation of the loan equals _____.
A. the future value of the present cash payments discounted at the yield required by the borrower.
B. the future value of the present cash payments discounted at the yield required by the lender.
C. the present value of the future cash payments discounted at the yield required by the borrower.
D. the present value of the future cash payments discounted at the yield required by the lender.
E. the future value of the present cash payments undiscounted.
52. When the stated interest rate for a loan equals the yield required by the lender, then the amount borrowed equals the
A. principal amount of the loan.
B. principal amount of the loan plus a premium.
C. principal amount of the loan less a discount.
D. fair amount of the loan.
E. fair amount of the loan less a discount.
53. The amount reported on the balance sheet throughout the life of a loan (that is, its carrying value) equals
A. the future value of the remaining cash flows discounted at the historical market interest rate.
B. the present value of the remaining cash flows discounted at the historical market interest rate.
C. the future value of the remaining cash flows discounted at the current market interest rate.
D. the present value of the remaining cash flows discounted at the current market interest rate.
E. the future value of the remaining cash flows discounted at the fair market interest rate.
54. _____ often advise corporate borrowers on the sorts of financial instruments the lending market appears to prefer at the time the firm wants to borrow.
A. Stockbrokers
B. Investment bankers
C. Underwriters
D. Board of Directors
E. Chief Financial Officers
55. Bonds whose indentures contain a provision which gives the issuing company the option to retire portions of the bond issue before maturity if it so desires, but the provision does not require the company to do so are called _____ bonds.
A. callable
B. refunded
C. sinking fund
D. serial
E. convertible
56. A firm classifies liabilities which fall due after the operating cycle, usually greater than one year, as
A. a current liability.
B. a long-term asset.
C. a noncurrent liability.
D. part of shareholders’ equity.
E. contingent liability.
57. A firm classifies mortgages, notes, bonds, and leases which were used to acquire its long-term assets that fall due after the operating cycle, (usually greater than one year) as
A. a current liabilities.
B. a long-term asset.
C. a long-term liabilities.
D. part of shareholders’ equity.
E. contingent liabilities.
58. When the bond indenture provides that stated amounts of principal will become due during the term of the bond, the bond is called a _____ bond.
A. sinking fund
B. serial
C. callable
D. refunded
E. convertible
59. A callable bond
A. must be retired from a sinking fund maintained by the bond issuer.
B. may be retired at a specified price at the option of the bond purchaser.
C. may be reacquired by the issuing company at a specified price.
D. are registered with an agent to insure correct payment of bond interest amounts.
E. are convertible into common stock at par values.
60. Bonds whose indentures contain a provision which requires the issuing firm to make a provision for partial early retirement of the bond issue include serial bonds and _____ bonds.
A. callable
B. refunded
C. sinking fund
D. convertible
E. zero coupon
