6. Which of the following ratios would be the most useful to assess the risk associated with a firm being able to pay off its short-term debt?

a. Return on equity

b. The current ratio

c. The operating profit margin

d. The debt ratio

7. When does an IPO occur?

a. Whenever a corporation is first organized

b. When a corporation borrows money

c. When a corporation goes out of business

d. When a corporation first sells its stock to the public

8. "Which of the following is definitely true of an A rated bond, as compared to a B rated bond?"

a. The A rated bond will have a higher coupon rate of interest.

b. The B rated bond must have a longer term.

c. There is less default risk associated with the A rated bond.

d. The B rated bond is considered investment grade.

9. "A bond has a face value of $1,000. The coupon rate of interest is 5%. The bond is currently selling in the market for $980. A potential investor has calculated that the present value of the bond to her is $960. What is the most that the investor should be willing to pay for the bond? "

a. $960

b. $980

c. "$1,000 "

d. "$1,050 "

10. "The financial statement that contains revenue, expenses and net income is:"

a. statement of stockholders equity.

b. statement of retained earnings.

c. income statement.

d. balance sheet.