Questions from Managerial Finance

Q: What is the general relationship between the theoretical and market values of

What is the general relationship between the theoretical and market values of a warrant? In what circumstances are these values quite close? What is a warrant premium?

Q: What is an option? Define calls and puts. What role

What is an option? Define calls and puts. What role, if any, do call and put options play in the fund-raising activities of the firm?

Q: How can the firm use currency options to hedge foreign-currency

How can the firm use currency options to hedge foreign-currency exposures resulting from international transactions?

Q: For the following methods of using inventory as short-term loan

For the following methods of using inventory as short-term loan collateral, describe the basic features of each, and compare their use: (a) floating lien, (b) trust receipt loan, and (c) warehouse rec...

Q: Why do a firm’s regular credit terms typically conform to those of

Why do a firm’s regular credit terms typically conform to those of its industry?

Q: Why should a firm actively monitor the accounts receivable of its credit

Why should a firm actively monitor the accounts receivable of its credit customers? How are the average collection period and an aging schedule used for credit monitoring?

Q: What is leasing? Define, compare, and contrast operating leases

What is leasing? Define, compare, and contrast operating leases and financial (or capital) leases. How does the Financial Accounting Standards Board’s Statement No. 13 define a financial (or capital)...

Q: Describe the four basic steps involved in the lease-versus-

Describe the four basic steps involved in the lease-versus-purchase decision process. How are capital budgeting methods applied in this process?

Q: What type of lease must be treated as a capitalized lease on

What type of lease must be treated as a capitalized lease on the balance sheet? How does the financial manager capitalize a lease?

Q: List and discuss the commonly cited advantages and disadvantages that should be

List and discuss the commonly cited advantages and disadvantages that should be considered when deciding whether to lease or purchase.