77.Which of the following is not an example of a negative covenant?
a.Borrowers may not sell accounts receivable to generate cash.
b.The borrower is required to maintain a minimum level of net working capital.
c.Constraints associated with fixed assets regarding the liquidation, acquisition and encumbrance.
d.Constraints associated with consolidation, merging or combining with another firm.
e.All of the above are examples of negative covenants.
78.With respect to the size of a loan:
a.the larger the loan the better the economies of scale with respect to loan administration costs per dollar borrowed.
b.the greater the risk to the lender because larger loans result in less diversification.
c.there is a risk trade-off associated with net administrative costs.
d.all of the above
e.(a) and (b) only
79.Which of the following statements is true?
a.U.S. Treasury securities with relevant maturities are used as the basic cost of money and lenders add premiums for risk and other factors.
b.Some lenders determine a prospective borrower's risk class and determine the rates charged on loans with similar maturities by firms in the same risk class.
c.All borrowers are charge the same rate regardless of their risk class.
d.Both (a) and (b) are true
e.None of the above statements are true.
80.A loan made by an institution to a business with an initial maturity of more than 1 year, generally 5 to 12 years, is known as a(n):
a.Eurocurrency loan
b.Treasury bill
c.syndicated loan
d.term loan
e.stock purchase warrant
81.Term loans:
a.are essentially private placements of debt, bypassing an investment banker as an intermediary.
b.are more flexible than publicly-traded debt
c.are often made to finance permanent working capital needs
d.all of the above
e.(a) and (b) only
82.An instrument that gives the holder the right to purchase a certain number of shares of a firm's common stock at a specified price over a certain period is known as a(n):
a.Eurocurrency loan
b.Treasury bill
c.syndicated loan
d.term loan
e.stock purchase warrant
83.A floating-rate, hard-currency loan made by a large number of international banks to international corporate and government borrows is known as:
a.Eurocurrency loan
b.Treasury bill
c.syndicated loan
d.term loan
e.stock purchase warrant
84.The protection of bond collateral
a.is crucial to increasing the safety of the bond issue.
b.helps enhance the marketability of the bond issue.
c.does not usually occur in a bond issue.
d.both (a) and (b)
85.Which of the following has (have) transformed U.S. bond-issuance patterns?
a.shelf registration
b.Rule 42
c.Section 12-b
d.Rule 144A
e.both (a) and (d)
86.Which of the following qualifies as a Eurobond?
a.A dollar-denominated bond issued by a U.S. corporation and sold to Western European investors.
b.A dollar-denominated bond issued by a U.S. corporation and sold to U.S. investors.
c.A Euro-denominated bond issued by a German corporation and sold to U.S. investors.
d.A Euro-denominated bond issued by a German corporation and sold to European investors.
87.Which of the following qualifies as a foreign bond?
a.A Swiss franc-denominated bond issued in Switzerland by a U.S. corporation.
b.A dollar-denominated bond issued by a U.S. corporation and sold to non-U.S. investors.
c.A Euro-denominated bond issued by a German corporation and sold to U.S. investors who live in Germany.
d.A Euro-denominated bond issued by a German corporation and sold to European investors.
88.A lease that results when a lessor acquires the assets that are leased to a given lessee is known as a:
a.direct lease
b.sale-leaseback arrangement
c.leverage lease
d.none of the above
89.When one firm sells an asset to another for cash and then leases the asset from its new owner, it is known as a:
a.direct lease
b.sale-leaseback arrangement
c.leveraged lease
d.none of the above
