Building a Model for Long-Term Forecasting Reveals Points in the Future

question 75

Multiple Choice

Building a model for long-term forecasting reveals points in the future where the firm will have ________.

• A) excess cash that can be used for dividends, debt repayment, or stock repurchases
• B) cash needs that must be funded with external financing
• C) a need for expanding property, plant and equipment to meet increases in capacity
• D) all of the above

---

Definitions:

Par Value

The nominal face value of a bond or stock as stated by the issuer, often used to determine interest payments.

Interest Rates

Interest rates are the cost of borrowing money expressed as a percentage of the total amount loaned, influencing economic activity by affecting spending and saving behaviors.

Premium

The amount paid for an insurance policy, or the extra cost for financial instruments or securities about their nominal or face value.

Duration

A measurement of the sensitivity of the price of a bond or other debt investment to changes in interest rates, typically expressed in years.