additional shares

Short-term debt securities.
Long-term bonds.
8. Which of the following statements is CORRECT?
If Apple issues additional shares of common stock through an investment banker, this would be a secondary market transaction.
If you purchased 100 shares of Apple stock from your sister-in-law, this would be an example of a primary market transaction.
The IPO market is a subset of the secondary market.
Only institutions, and not individuals, can participate in derivatives market transactions.
As they are generally defined, money market transactions involve debt securities with maturities of less than one year.
9. DeYoung Devices Inc., a new high-tech instrumentation firm, is building and equipping a new manufacturing facility. Assume that currently its equipment must be depreciated on a straight-line basis over 10 years, but Congress is considering legislation that would require the firm to depreciate the equipment over 7 years. If the legislation becomes law, which of the following would occur in the year following the change?
The firm’s reported net income would increase.
The firm’s operating income (EBIT) would increase.
The firm’s taxable income would increase.
The firm’s net cash flow would increase.
The firm’s tax payments would increase.
10. Which of the following factors could explain why Regal Industrial Fixtures had a negative net cash flow last year, even though the cash on its balance sheet increased?
The company repurchased 20% of its common stock.
The company sold a new issue of bonds.
The company made a large investment in new plant and equipment.
The company paid a large dividend.
The company had high amortization expenses.
11. Which of the following statements is CORRECT?
The statement of cash flows shows how much the firm’s cash⎯the total of currency, bank deposits, and short-term liquid securities (or cash equivalents)⎯increased or decreased during a given year.
The statement of cash flows reflects cash flows from operations, but it does not reflect the effects of buying or selling fixed assets.
The statement of cash flows shows where the firm’s cash is located; indeed, it provides a listing of all banks and brokerage houses where cash is on deposit.
The statement of cash flows reflects cash flows from continuing operations, but it does not reflect the effects of changes in working capital.
The statement of cash flows reflects cash flows from operations and from borrowings, but it does not reflect cash obtained by selling new common stock.
12. Which of the following statements is CORRECT?
One way to increase EVA is to achieve the same level of operating income but with more investor-supplied capital.
If a firm reports positive net income, its EVA must also be positive.
One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free.
One way to increase EVA is to generate the same level of operating income but with less investor-supplied capital.
Actions that increase reported net income will always increase net cash flow.
13. The LeMond Corporation just purchased a new production line. Assume that the firm planned to depreciate the equipment over 5 years on a straight-line basis, but Congress then passed a provision that requires the company to depreciate the equipment on a straight-line basis over 7 years. Other things held constant, which of the following will occur as a result of this Congressional action? Assume that the company uses the same depreciation method for tax and stockholder reporting purposes.
LeMond’s tax liability for the year will be lower.
LeMond’s taxable income will be lower.
LeMond’s net fixed assets as shown on the balance sheet will be higher at the end of the year.
LeMond’s cash position will improve (increase).
LeMond’s reported net inco

additional shares was first posted on November 29, 2019 at 1:30 pm.
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