Which of the Following Modern Methods of Financing a Corporation

question 312

Multiple Choice

Which of the following modern methods of financing a corporation was not available to corporations four hundred years ago?

• A) Selling stock.
• B) Selling bonds.
• C) Reinvestment.
• D) All of these methods were used then as well as now.

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Definitions:

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.

Firm Commitment

An agreement between a buyer and an underwriter in which the underwriter guarantees the sale of a certain amount of securities.

Cash Flow Hedge

A hedging strategy used to manage risk associated with variability in cash flows, typically related to interest rates or currency exchange rates.

Inventory Purchase

The process of acquiring goods that a company will sell to customers or use in the production of goods to be sold.