Other Things Constant, the More Profitable a Corporation Is

question 63

Multiple Choice

Other things constant, the more profitable a corporation is,

• A)the lower the value of its shares on the stock market and the lower the interest rate that would have to be paid on new bond issues
• B)the higher the value of its shares on the stock market and the higher the interest rate it would have to pay on new bond issues
• C)the higher the value of its shares on the stock market and the lower the interest rate that would have to be paid on new bond issues
• D)the lower the value of its shares on the stock market and the higher the interest rate that would have to be paid on new bond issues
• E)the lower the interest rate that would have to be paid on new bond issues; the value of its shares on the stock market does not vary

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Definitions:

Permanent Endowment

A donation of money or property to a nonprofit organization, which uses the resulting investment income for a specific purpose.

Fundraising Activities

Efforts undertaken by an organization to generate voluntary financial contributions from individuals, businesses, charitable foundations, or governmental agencies.

Conditional Contribution

A donation made with specified terms that must be met for the contribution to be retained by the recipient.

FASB

The Financial Accounting Standards Board (FASB) is an independent organization responsible for establishing accounting and financial reporting standards for companies and non-profit organizations in the United States.