Quiz Chp 12,13 & 15 FinMan

Under a court-supervised corporate reorganization plan, the business may be run by ...

• a court-appointed trustee

• current managers

• a court-appointed trustee and current managers

• None of the above

Bacon Signs Inc. has planned a 3-month issue of commercial paper with a face value of $15,000,000. The paper is set to sell at 99.5% of face value. What is the discounted selling price of the firm's commercial paper?

• $14,925,000

• $14,995,000

• $15,000,000

• $15,300,000

Commercial paper and banker's acceptances are two forms of corporate financing typically undertaken by ...

• start-up firms

• mature firms

• sole proprietorships

• All of the above

New York Investments (NYI), an investment banking firm, has proposed two types of payment plans for the IPO being considered by Albany Exploration. The first is a firm commitment of $40,000,000. The second is a best efforts arrangement in which NYI will receive $2.00 for every share sold up to a maximum of $3,600,000 for the 1,800,000 shares being offered. How much money will NYI earn under the best efforts method if it is able to sell only 95% of the offering at a price of $25.00 per share?

• $3,420,000

• $3,600,000

• $3,200,000

• $2,800,000

The process for selling stock for the very first time is known as ...

• an initial public offering

• a primary market

• first refusal rights

• a rookie offering

Hopewell Drugstore plans to sell 50,000 bonds each with a face value of $1,000. If all of the bonds eventually sell for $975 each and the firm's investment banker receives a commission of 1.50% for every bond sold, what are the net proceeds to the firm from the sale of the bond issue?

• $48,018,750

• $43,415,250

• $41,500,000

• $40,875,750

The bond indenture contains ALL BUT WHICH of the following?

• The coupon rate

• The yield-to-maturity

• The maturity date

• The par value

Pacific Automotive has a $250,000 compensating balance loan with its bank. The terms of the loan call for Pacific to keep 10% of the loan as a compensating balance and pay interest at an annual rate of 6.50% on the entire amount. If the firm borrows the maximum amount for one year, how much interest is due at the end of the year?

• $14,625

• $16,250

• $22,500

• $25,000

Your bank grants you a lump sum loan today equal to the face value of the loan less the interest. Further you must repay the face value of the loan amount in a single lump sum at the end of one year. These terms most closely resemble which of the following types of bank loan?

• Straight loan with a pre-set payment schedule

• Compensating balance loan

• Line of credit

• Discount loan

Starting a business with ... is by far the most common start-up financing

• bonds and equity

• personal and family funds

• bank loans

• venture capital