Most of the Evidence to Date Indicates That Firms with Which

question 5

Multiple Choice

Most of the evidence to date indicates that firms with which two of the following characteristics are most apt to frequently use derivatives?

• A) Low financial distress costs and constrained access to capital markets
• B) Small in size and low financial distress costs
• C) Easy access to capital markets and high financial distress costs
• D) High financial distress costs and constrained access to capital markets
• E) High financial distress costs and easy access to capital markets

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Definitions:

Market Value

Market value is the existing price point at which you can buy or sell an asset or service within a marketplace.

Consolidated Financial Statements

Financial statements that aggregate the financial position and operating results of a parent company and its subsidiaries.

Intangible Assets

Non-physical assets owned by a business that can produce future economic benefits, such as intellectual property, goodwill, and licenses.

Expected Useful Life

It refers to the estimated duration a fixed asset is expected to be economically useful to the owner, beyond which it is considered to depreciate.