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Which one of these is a negative covenant that might be found in a bond indenture? A. The company shall maintain a cash surplus of
Which one of these is a negative covenant that might be found in a bond indenture?
- A. The company shall maintain a cash surplus of $100,000 at all times.
- B. The company cannot lease any major assets without bondholder approval.
- C. The company shall provide audited financial statements in a timely manner.
- D. The company shall maintain a current ratio of 1.1 or higher.
- E. The company must maintain the loan collateral in good working order.
Which statement is correct?
- A. An underpriced security will plot below the security market line.
- B. A security with a beta of 1.54 will plot on the security market line if it is correctly priced.
- C. A security with a beta of .99 will plot above the security market line if it is correctly priced.
- D. A portfolio with a beta of .93 will plot to the right of the overall market.
- E. A risk-free security will plot at the origin.
Which one of the following will occur when the internal rate of return equals the required return?
- A. The average accounting return will equal 1.0.
- B. The profitability index will equal 0.
- C. The net present value will equal the initial cash outflow.
- D. The profitability index will equal 1.0.
- E. The profitability index will equal the average accounting return.
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