QUESTION 11 1. 11. A leveraged buyout involves individuals assuming large personal debt loads in order to purchase the company from a previous owner. True False 2 points

QUESTION 12 1. 12. Money managers, who are considered institutional investors in our company, have considerable influence over the CFOs decisions because of their large number of shares under management. True False 2 points

QUESTION 13 1. 13. When converting from a bond to a stock security, the bondholder must consider not only the conversion ratio, but also the interest payments and dividend payments of the respective investments. True False 2 points

QUESTION 14 1. 14. One reason for no cash dividends during the development stage of a new product or service, is so the company can use the retained earnings for research and development purposes in an effort to grow the company. True False 2 points

QUESTION 15 1. 15. Preferred stock is considered a hybrid because the value can increase, like common stock, but it also offers interest payments, like a bond. True False 2 points

QUESTION 16 1. 16. Default is a legal procedure where the assets of the firm are transferred to the debt-holders. True False 2 points

QUESTION 17 1. 17. Agency problems exist when the company is owned and managed by an individual or group of individuals who work for their best interest, but reduce the value of the company through their actions. True False 2 points

QUESTION 18 1. 18. A company should continue to add debt to the capital structure, up to some point where the tax benefits are overcome by the burden of interest payments, in order to optimize the capital structure. True False 2 points

QUESTION 19 1. 19. At the first class meeting, six main principles of finance were discussed, which were underscored numerous times since the beginning. Explain the role of the Financial Manager in developing and working with each of these principles in the corporation. Path: p Words:0