Corporate Equity Financing Instruments Generally Specify

question 29

Multiple Choice

Corporate equity financing instruments generally specify:

• A) the amount of the debt and length of the debt period
• B) the debt repayment method and rate of interest
• C) the amount of bonds that may be sold to investors
• D) all of the other specific choices
• E) none of the other choices

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Definitions:

Straight-Line Method

An accounting method for allocating the cost of an asset evenly over its useful life.

Cost of Capital

The obligatory profit percentage a corporation needs to achieve on its investments to keep its market share and attract investors.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments, representing the discount rate that makes the net present value (NPV) of all cash flows equal to zero.

Net Cash Flows

The difference between a company's cash inflows and outflows during a specific period, representing its ability to generate value.