Question: 1. When preferred stock has a convertible component in its offering, the conversion ratio is the ratio that determines how many shares of common stock

1. When preferred stock has a convertible component in its offering, the conversion ratio is the ratio that determines how many shares of common stock the investor can secure for each share of preferred stock they own. True False

4. The prospectus for stock and a bonds covenant agreement are legal documents which describe certain parameters or obligations of the company to holders. True False

28. An IOS chart will demonstrate an organizations optimal capital budget where the investment opportunity schedule intersects with the companys marginal cost of capital. True False

29. The payback period rule, unlike the net present value rule, adjusts for the riskiness of an investment. True False

30. In addition to determining what investments create the most value, a finance manager will also need to determine which mix of capital is optimal for financing the investment alternatives. True False

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