Question

In: Finance

Which of the following statements is NOT true? A. Larger corporations have easier access to the...

Which of the following statements is NOT true?

A.

Larger corporations have easier access to the securities market
B.

Debt contracts tend to impose more restrictions on the actions of the borrower than the lender
C.

Collateral is used to secure debt contracts
D.

The financial sector is one of the least regulated industries in the US economy

Solutions

Expert Solution

A.   Larger corporations have easier access to the securities market because it has the capacity to pay the fees required to raise capital in the debt market. It also has the capacity to pay a higher interest to its lenders. So this statement is true.

B.   Debt contracts impose more restrictions on the actions of the borrower than the lender because, debt contracts want to safeguard the interests of the the debtholders. These restrictions are known as covenants and could be anything like the company or the borrower can't issue a senior debt to this debt. These ensure that the company or the borrower acts responsible and is in a position to pay the interest and the principal without any default. So this statement is true.

C.   Collateral is the underlying security which is forfeited if the borrower defaults on any of his obligations. The lender can then sell the collateral to generate the amount he is owed. So the statement is true that the collateral is used to secure a debt.

D.   US financial sector is highly regulated with SEC at the top of all regulations. The Dodd Frank Act of 2010 is also there to regulate the markets a a post 2008 financial crisis. This act has created more stringent rules for the sector and is therefore the topic of current debate in the US politics. So this statement is false.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

1. Which of the following statements is NOT true about cell size? Larger cells require more...
1. Which of the following statements is NOT true about cell size? Larger cells require more materials to survive. Material needs are tied to Volume. Maximum cell size is limited by the surface area to volume ratio When cell volume is doubled, the surface area is also doubled. As a cell increases in size, the volume increases faster than its surface area The amount of surface area of a cell determines how much material can be absorbed through the membrane...
Which of the following is true of the multiplier: A) It is larger or higher than...
Which of the following is true of the multiplier: A) It is larger or higher than 1 when unemployment is below the natural rate of unemployment. That is government is spending increases or tax decreases have less effect when the economy is doing well. B) It is smaller or below 1 when unemployment is below the natural rate of unemployment. That is government spending increases or tax decreases have less effect when the economy is doing well. C) It is...
Which of the following is true? Many large U.S corporations have more sales and profits in...
Which of the following is true? Many large U.S corporations have more sales and profits in foreign companies than in the U.S. The U.S. has lower corporate taxes than most other industrialized nations. Legally, a U.S. corporation must have the majority of its sales in the U.S. Globalization has harmed the sales of most U.S. corporations.
Which of the following statements are true?
Which of the following statements are true? 1. Fats that contain more saturated fatty acid residues than unsaturated fatty acid residues are more likely to be solid at room temperature. 2. Triacylglycerols (triglycerides) contain ester bonds. 3. Saturated fats have lower melting points than do unsaturated fats. 4. Triacylglycerols (triglycerides) always contain three identical fatty acids. 5. Unsaturated fats are more likely than saturated fats to be liquid at room temperature.
Which of the following statements is true?
Which of the following statements is true?When a company goes bankrupt, common stockholders are the first to get paid.A preferred stock promises investors a fixed stream of dividend payments.Holders of preferred stocks have residual claim on the company’s assets and cash flows.Investing in a bond of a company is riskier than investing in a stock of the same company.
Which of the following statements is true?
Which of the following statements is true?The ask price a dealer quotes on a security is the price for which he is willing to sell the security.We can buy IBM shares from a stock broker.Any investor can buy securities from a private offering.A broker holds an inventory of securities
Which of the following statements is true?
Which of the following statements is true? a. Increasing the use of trade credit offered by a supplier is a use of cash. b. Cash is decreased when new debt is issued to purchase holiday merchandise. c. Collecting an accounts receivable is a use of cash. d. Accepting the credit offered by a supplier is a source of cash.
Which of the following statements is true?
Question 34 (1 point) Which of the following statements is true? a Because prices of food (like oranges) and energy products (like gasoline) are subject to wide swings that can be temporary in nature (these prices are very volatile), the Bureau of Labor Statistics (BLS) also reports the core CPI, which is the CPI less food and energy. b Real income is the number of dollars received as wages, rent, interest, or profit. Nominal income is not adjusted for inflation....
Which of the following statements is true?
Question 1 (0.5 point) Which of the following statements is true? • Catabolism is the breakdown of large molecules into smaller ones. Energy is generally absorbed during catabolism. • Anabolism is the breakdown of large molecules into smaller ones. Energy is generally absorbed during anabolism. • Catabolism is the breakdown of large molecules into smaller ones.Energy is generally released during catabolism. • Anabolism is the breakdown of large molecules into smaller ones.Energy is generally released during anabolism. Question 2 (0.5...
Which of the following statements is true?
 Question 8 Which of the following statements is true? SNPs do not account for any of the genetic variation in the human genome SNPs are nucleotide polymorphisms that differ in a population CNVs are not an important source in the variation of the human genome All of the above statements are true Question 9 Why are genetic changes that lead to a selective disadvantage usually lost? Changes detrimental to survival can lead to fewer offspring and will not be passed on Genetic repair mechanisms will erase the mistake Organisms can...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT