FIN /
320F
/ /
Exam 4 Questions With Correct Answers
/ // // // // //
Balance //Sheet //Model //of //the //Firm //- //verified //answer(s)-
✔✔The /
/assets /
/of /
/the /
/firm /
/must /
/be /
/supported /
/by /
/the /
/firm /
/obtaining /
/financing /
/(borrowing /
/or /
/issue /
/equity). /
/Follows /
/the /
/cost /
/principle /
/and /
/records /
/asset /
/and /
/claims /
/at /
/their //historic //costs //when //added //to //the //balance //sheet. //The //economic //balance //sheet //also
//looks //at //assets //and //claims, //but //uses //current //market //values.
,Bond //- //verified //answer(s)-✔✔A //security //representing //the //long-term //debt //of //a //company.
Bank //loan //- //verified //answer(s)-
✔✔Indirect /
/financing /
/where /
/the /
/company /
/borrows /
/funds /
/from //
a/
/bank, /
/which /
/gets //those //funds //from //savers. //These //claims //are //not //traded //in //the //financial //markets.
Preferred //stock //- //verified //answer(s)-
✔✔A /
/type /
/of /
/stock /
/whose /
/holders /
/are /
/given /
/certain /
/priority /
/over /
/common /
/shareholders /
/in /
/the /
/payment /
/of /
, /dividends. /
/Usually //the //dividend //rate //is //fixed //at //the //time //of //issue //and //no //voting //rights //are //given.
Common //stock //- //verified //answer(s)-
✔✔Equity /
/claims /
/held /
/by /
/the //"residual /
/owners" //of //the //firm //who //are //the //last //to //receive //any //distribution //of //earnings //or //assets.
Privately //held //company //- //verified //answer(s)-
✔✔A /
/company /
/that /
/raises /
/capital //by //selling //their //securities //directly //to //investors //rather //than //the //general //public.
Publicly //traded //Corporations //- //verified //answer(s)-
✔✔Corporations /
/who /
/fulfill /
/registration //and //reporting //requirements //and //are //authorized //to //sell //financial //securities //to
//the //general //public.
Primary //market //transaction //- //verified //answer(s)-
✔✔Corporations /
/and /
/other /
/organizations, /
/with /
/the /
/assistance /
/of /
320F
/ /
Exam 4 Questions With Correct Answers
/ // // // // //
Balance //Sheet //Model //of //the //Firm //- //verified //answer(s)-
✔✔The /
/assets /
/of /
/the /
/firm /
/must /
/be /
/supported /
/by /
/the /
/firm /
/obtaining /
/financing /
/(borrowing /
/or /
/issue /
/equity). /
/Follows /
/the /
/cost /
/principle /
/and /
/records /
/asset /
/and /
/claims /
/at /
/their //historic //costs //when //added //to //the //balance //sheet. //The //economic //balance //sheet //also
//looks //at //assets //and //claims, //but //uses //current //market //values.
,Bond //- //verified //answer(s)-✔✔A //security //representing //the //long-term //debt //of //a //company.
Bank //loan //- //verified //answer(s)-
✔✔Indirect /
/financing /
/where /
/the /
/company /
/borrows /
/funds /
/from //
a/
/bank, /
/which /
/gets //those //funds //from //savers. //These //claims //are //not //traded //in //the //financial //markets.
Preferred //stock //- //verified //answer(s)-
✔✔A /
/type /
/of /
/stock /
/whose /
/holders /
/are /
/given /
/certain /
/priority /
/over /
/common /
/shareholders /
/in /
/the /
/payment /
/of /
, /dividends. /
/Usually //the //dividend //rate //is //fixed //at //the //time //of //issue //and //no //voting //rights //are //given.
Common //stock //- //verified //answer(s)-
✔✔Equity /
/claims /
/held /
/by /
/the //"residual /
/owners" //of //the //firm //who //are //the //last //to //receive //any //distribution //of //earnings //or //assets.
Privately //held //company //- //verified //answer(s)-
✔✔A /
/company /
/that /
/raises /
/capital //by //selling //their //securities //directly //to //investors //rather //than //the //general //public.
Publicly //traded //Corporations //- //verified //answer(s)-
✔✔Corporations /
/who /
/fulfill /
/registration //and //reporting //requirements //and //are //authorized //to //sell //financial //securities //to
//the //general //public.
Primary //market //transaction //- //verified //answer(s)-
✔✔Corporations /
/and /
/other /
/organizations, /
/with /
/the /
/assistance /
/of /
