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 ...
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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