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10. 11. 6 7 A C A finn will ally increase the ris of shorter den g des has lower at that long um opty The te sture is inverted and expected shift d A) Short-te The terminare is upward sloping and expected to shift up The firm is indertaking a large capital budging pot (1) O D) Dharing tight may period (A) C) D) B) O Di 9082 The belief that investors require a higher return to entice them into holding hong- securities is the viewpoint of the A The expectations hypothesis Segmentation theory The liquidity premium theory Market credit crunch theory D A) B) O D) By Long-term rates are higher than short-teras Short-term rates are higher than long-term rates Short-term rates are equal to long-term rates The relationship between short and long-term rates remained unchanged. Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under sight money conditions (10% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan 87 $28,800 $4,000 The term "structure of interest rates" is influenced by: A) Inflation B) Money supply Federal Reserve activities. All of the above $4,800 $35.200 A conversely financed firm would A) Use long-term financing for all fixed assets and short-tens financing for all other assets Finance a portion of permanent assets and short-term assets with short-term debt Use equity to finance fixed assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets Use long-term financing for permanent assets and fixed assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets. 6. 7. 8. 9. 10. 11. A firm will usually increase the ratio of short-term debt to long-term debt when: Short-term debt has a lower cost than long-term equity. The term structure is inverted and expected to shift down. The term structure is upward sloping and expected to shift up. The firm is undertaking a large capital budgeting project. A) B) C) D) During tight money period: A) B) C) D) The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the: The expectations hypothesis. Segmentation theory. The liquidity premium theory. Market credit crunch theory. A) B) D) Long-term rates are higher than short-term rates. Short-term rates are higher than long-term rates. Short-term rates are equal to long-term rates. The relationship between short and long-term rates remained unchanged. Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan B? $28,800 $4,000 $4,800 $35,200 A) B) C) D) The term "structure of interest rates" is influenced by: Inflation. Money supply. Federal Reserve activities. All of the above. B) C) D) A conversely financed firm would: A) Use long-term financing for all fixed assets and short-term financing for all other assets. Finance a portion of permanent assets and short-term assets with short-term debt. Use equity to finance fixed assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets. Use long-term financing for permanent assets and fixed assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets. 10. 11. 6 7 A C A finn will ally increase the ris of shorter den g des has lower at that long um opty The te sture is inverted and expected shift d A) Short-te The terminare is upward sloping and expected to shift up The firm is indertaking a large capital budging pot (1) O D) Dharing tight may period (A) C) D) B) O Di 9082 The belief that investors require a higher return to entice them into holding hong- securities is the viewpoint of the A The expectations hypothesis Segmentation theory The liquidity premium theory Market credit crunch theory D A) B) O D) By Long-term rates are higher than short-teras Short-term rates are higher than long-term rates Short-term rates are equal to long-term rates The relationship between short and long-term rates remained unchanged. Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under sight money conditions (10% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan 87 $28,800 $4,000 The term "structure of interest rates" is influenced by: A) Inflation B) Money supply Federal Reserve activities. All of the above $4,800 $35.200 A conversely financed firm would A) Use long-term financing for all fixed assets and short-tens financing for all other assets Finance a portion of permanent assets and short-term assets with short-term debt Use equity to finance fixed assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets Use long-term financing for permanent assets and fixed assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets. 6. 7. 8. 9. 10. 11. A firm will usually increase the ratio of short-term debt to long-term debt when: Short-term debt has a lower cost than long-term equity. The term structure is inverted and expected to shift down. The term structure is upward sloping and expected to shift up. The firm is undertaking a large capital budgeting project. A) B) C) D) During tight money period: A) B) C) D) The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the: The expectations hypothesis. Segmentation theory. The liquidity premium theory. Market credit crunch theory. A) B) D) Long-term rates are higher than short-term rates. Short-term rates are higher than long-term rates. Short-term rates are equal to long-term rates. The relationship between short and long-term rates remained unchanged. Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan B? $28,800 $4,000 $4,800 $35,200 A) B) C) D) The term "structure of interest rates" is influenced by: Inflation. Money supply. Federal Reserve activities. All of the above. B) C) D) A conversely financed firm would: A) Use long-term financing for all fixed assets and short-term financing for all other assets. Finance a portion of permanent assets and short-term assets with short-term debt. Use equity to finance fixed assets, long-term debt to finance permanent assets, and short-term debt to finance fluctuating current assets. Use long-term financing for permanent assets and fixed assets and a portion of the short-term fluctuating assets and use short-term financing for all other short-term assets

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