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Question
Which of the following statements is CORRECT?a. If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.
b. Since depreciation is a source of funds, the more depreciation a company has, the larger its retained earnings will be, other things held constant.
c. A firm can show a large amount of retained earnings on its balance sheet yet need to borrow cash to make required payments.
d. Common equity includes common stock and retained earnings, less accumulated depreciation.
e. The retained earnings account as shown on the balance sheet shows the amount of cash that is available for paying dividends.
Answer
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In a portfolio of three different stocks, which of the following could NOT be true?
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Suppose that you're planning a vacation and borrow $2,000 from a bank for one year at a stated annual interest rate of 14 percent, with interest prepaid (a discounted loan). Also, assume that the bank requires you to maintain a compensating balance equal to 20 percent of the initial loan value. What effective annual interest rate are you being charged?a. 14.00%b. 8.57%c. 16.28%d. 21.21%e. 28.00%
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Which of the following is not correct for a firm with seasonal sales and customers who all pay promptly at the end of 30 days?
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