7 . If the capital markets are efficient , then the sale or purchase of any security at the prevailing market price is :
8 . Briefly describe the traditional position on capital structure .
Bambe Holdings , Inc . has debt with both a face and a market value of $ 2,000 . This debt has a coupon rate of 6 % and pays interest annually . The expected earnings before interest and taxes is $ 1,200 , the tax rate is 34 %, and the unlevered cost of capital is 12 %. What is the firm ’ s cost of equity ?
9 . Profitability ratios indicate :
I ) How productively is the firm utilizing its assets .
II ) How liquid is the firm .
III ) How profitable is the firm .
IV ) How highly is the firm valued by the investors .
10 . What are the primary reasons for a company to use debt in its capital structure ?
11 . The difference between Current Assets of a firm and its Current Liabilities is called
12 . What are the three basic financial statements ?
13 . The cash budget is the primary short-term financial planning tool . The key reasons a cash budget is created are :
14 . Firms can repurchase shares in the following ways :
I ) Open market repurchase
II ) Through a tender offer