The call option in a bond has a greater chance of being exercised (to the detriment of the bondholder) if market interest rates have fallen since the bond was issued.

a. True

b. False

A lease versus purchase analysis should compare the cost of leasing to the cost of owning, assuming that the asset purchased a. is financed with a mix of debt and equity based on the firm's target capital structure, i. e., at the WACC. b.

Which of the following situations generates a positive externality? a. A paid tutor instructing Alex in economics as fellow classmate b. Eleanor listens in without anyone knowing c. Using a leaf blower on your lawn early on a Sunday morning d.

A firm operates in a state that has a corporate income tax rate of 5% and is deductible from the federal taxes. If the incremental federal tax is 34%, then the combined effective tax rate is 35.9% a. true b. false

Pearson Motors has a target capital structure of 45% debt and 55% common equity, with no preferred stock. The yield to maturity on the company's outstanding bonds is 8%, and its tax rate is 40%. Pearson's CFO estimates that the company's WACC is 12.

General Products Company bought Special Products Division in 2014 and appropriately recorded $750,000 of goodwill related to the purchase.

The Romer and Romer 2010 paper in the American Economic Review found that tax changes that are made to promote long-run growth or to reduce an inherited budget deficit tend to result in ___.

According to income tax law, John could adjust the cost basis of his personal residence for which of the following items? A. Interest on the home loanB. Cost of adding a new garageC. DepreciationD. Cost of replacing the water heater

A firm had merchandise inventory of $30,000 on January 1, 2019. During the year the firm had purchases of $54,000, freight in of $1,200, purchases returns and allowances of $2,700, and purchases discounts of $900.

If the one-year discount factor is 0.8333, what is the discount rate (interest rate) per year?

Summarized operations for Splish Brothers Inc. for the month of July are as follows. Revenues recognized: for cash $30,000; on account $71,480. Expenses incurred: for cash $26,120; on account $41,220. Indicate for Splish Brothers Inc.