If a Corporation Wanted to Guarantee Its Long-Term Costs of Financing

question 78

Multiple Choice

If a corporation wanted to guarantee its long-term costs of financing an investment project, it could

• A) sell T-bill futures for when the funds were needed.
• B) buy T-bill futures for when the funds were needed.
• C) sell T-bond futures for when the funds were needed.
• D) buy T-bond futures for when the funds were needed.

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Definitions:

Consolidations Under IFRS

The process of merging the financial results of subsidiary companies with those of the parent company according to the International Financial Reporting Standards.

Noncontrolling Interest

refers to the portion of equity in a subsidiary not held by the parent company, often reflected as a separate component of equity in the consolidated financial statements.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Foreign Currency Transaction

A transaction that involves the exchange of currencies or the undertaking of financial obligations denominated in a currency other than the entity’s functional currency, requiring conversion and possibly leading to foreign exchange gains or losses.