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BCOR 2204 quiz 3 and Correct Answers 2024/2025 | Graded A+ $10.99   Add to cart

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BCOR 2204 quiz 3 and Correct Answers 2024/2025 | Graded A+

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BCOR 2204 quiz 3 and Correct Answers 2024/2025 | Graded A+

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  • August 15, 2024
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  • 2024/2025
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BCOR 2204 quiz 3

Debt - ANSincludes all borrowing incurred by a
firm, including bonds, and is repaid
according to a fixed schedule of payments.

Equity - ANSconsists of funds provided by the
firm's owners (investors or stockholders)
that are repaid subject to the firm's performance.

Which has a voice in management debt or equity? - ANSEquity

Which type of capital has an interest deduction - ANSDebt

Does debt or equity have a maturity? - ANSDebt has a stated maturity

Which is senior in claims on assets& income? - ANSDebt

Who gets claims first stockholders or bondholders? - ANSBondholders (creditors)

Which is riskier stocks or bonds? - ANSStocks

equity's maturity date - ANSThere is none, it's a permanent form of financing.

Interest payments to debt-holders are treated as... - ANStax deductible expenses

Are dividend payments tax deductible? - ANSNo

3 types of stock ownership - ANSPrivate
Closely owned (small group)
Publicly owned

Authorized shares - ANSshares of common stock that a firm's corporate charter allows it to
issue

Outstanding shares - ANSissued shares of common stock
held by investors, this includes private and public
investors.

Treasury stock - ANSissued shares of common stock held
by the firm; often these shares have been repurchased by
the firm.

, Issued shares - ANSshares of common stock that have
been put into circulation.

issued shares equation - ANSIssued shares = outstanding shares + treasury stock

initial financing for most firms.. - ANStypically comes from a firm's original founders in the form
of a common stock investment.

3 ways to 'go public' for a firm - ANSPublic offering, rights offering, private placement

Public offering - ANSWhen a firm offers its shares for
sale to the general public.

Rights offering - ANSWhen a firm sells new shares to existing shareholders

Private placement - ANSthe firm sells new securities directly to an investor or a group of
investors.

Find price of a stock by: - ANSdiscounting all future cashflows at an appropriate rate of return.

What are the future cash flows? - ANSDividends

Appropriate rate of return - ANSRisk of those dividends

Covenants - ANSConditions lenders place on firms that seek long-term debt financing. Written
into a bond.

Tax treatment - ANSinterest paid to bond holders vs. dividends to stock holders

Tax credit - ANSAn amount subtracted directly from the tax owed

Tax deductible - ANSable to be deducted from taxable income when calculating income tax due.
Lowers your tax burden.

What happens when a company buys its own shares - ANSDrives up price/demand for shares.

3 reasons people buy/sell stocks - ANSIncome (dividends)
Diversify (portfolio)
Pure speculation (thinking it will be worth more)

The more risky the dividends - ANSThe higher the rate of return

3 models for dividend growth rate - ANS0 growth

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