Optional Questions and Answers

Which of the following is the LEAST issued security by U.S. corporations?
a.Bonds
b.Preferred stock
a. Common stock
d.Both a and b

The SEC would not require registration of a public issue if the:
a. firm sells less than $1.5 million of new securities per year.
b. issue is sold entirely intrastate.
c. issue are long-term instruments only.
b. both a and b.
c. all of the above.

Which of the following is the most important factor that affects a firm's financing mix?
a.The amount of EPS
b.The amount of operating income
c.The number of shares that are outstanding
d.Business risk

From the information below, select the optimal capital structure for Mountain High Corp.
a.Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50
b.Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90
c.Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20
d.Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40
e.Debt = 70%; Equity = 30%; EPS = $3.31; Stock price = $30.00

Which of the following motivates corporations to enter into stock repurchase programs?
a.Favorable impact on EPS
b.Expected favorable impact on stock price
c.To modify the firm's capital structure
d.All of the above
e.None of the above

Which of the following is the LEAST issued security by U.S. corporations?
a.Bonds
b.Preferred stock
a. Common stock
d.Both a and b

The SEC would not require registration of a public issue if the:
a. firm sells less than $1.5 million of new securities per year.
b. issue is sold entirely intrastate.
c. issue are long-term instruments only.
b. both a and b.
c. all of the above.

Which of the following is the most important factor that affects a firm's financing mix?
a.The amount of EPS
b.The amount of operating income
c.The number of shares that are outstanding
d.Business risk

From the information below, select the optimal capital structure for Mountain High Corp.
a.Debt = 40%; Equity = 60%; EPS = $2.95; Stock price = $26.50
b.Debt = 50%; Equity = 50%; EPS = $3.05; Stock price = $28.90
c.Debt = 60%; Equity = 40%; EPS = $3.18; Stock price = $31.20
d.Debt = 80%; Equity = 20%; EPS = $3.42; Stock price = $30.40
e.Debt = 70%; Equity = 30%; EPS = $3.31; Stock price = $30.00

Which of the following motivates corporations to enter into stock repurchase programs?
a.Favorable impact on EPS
b.Expected favorable impact on stock price
c.To modify the firm's capital structure
d.All of the above
e.None of the above