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Exam (elaborations)

BFIN 350 CHAPTER 1 AND 2 EXAM QUESTIONS WITH CORRECT ANSWERS

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  • Course
  • BFIN 350
  • Institution
  • BFIN 350

BFIN 350 CHAPTER 1 AND 2 EXAM QUESTIONS WITH CORRECT ANSWERS Time preference refers to the fact that - Answer-investors prefer current cash flows to future cash flows The Primary market is defined as - Answer-the market for new issues A corporate security can be viewed as a contingent claim on ...

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  • October 9, 2024
  • 3
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • BFIN 350
  • BFIN 350
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BFIN 350 CHAPTER 1 AND 2
EXAM QUESTIONS WITH
CORRECT ANSWERS

Time preference refers to the fact that - Answer-investors prefer current cash flows to
future cash flows

The Primary market is defined as - Answer-the market for new issues

A corporate security can be viewed as a contingent claim on the firm this means that -
Answer-Debt holders will receive their payoff from the firm based on their fixed claim or
the firm cash flows if less than the fixed claim

If a firm has debt outstanding the contingent claim of an equity shareholder is - Answer-
Equal to the firm cash flows minus the fixed debt payment if the residual cash flows are
positive

Corporate securities are contingent claims because - Answer-the securities value is
derived from the total value of the firm

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