Which of the Following Is Typically True Regarding a Firm

question 44

Multiple Choice

Which of the following is typically true regarding a firm with a long development cycle time?

• A) It can quickly revise or upgrade its product offering.
• B) Its cost of capital will increase.
• C) It can take advantage of both first-mover and second-mover advantages.
• D) It is more likely to be able to fully amortize the fixed costs of development before that generation becomes obsolete.

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Definitions:

Discount on Bonds Payable

Discount on bonds payable represents the difference between the face value of a bond and its selling price, when the bond is sold for less than its face value.

Premium on Bonds Payable

The excess of a bond's selling price over its principal amount.

Debenture Bonds

Fixed-interest unsecured loans issued by companies, backed only by the creditworthiness and reputation of the issuer, rather than by a lien on any specific asset.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.