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Questions and Answers
What is the main purpose of covenants in a debt agreement?
What is the main purpose of covenants in a debt agreement?
- To provide tax-deductible interest on borrowed money
- To ensure the repayment of borrowed capital
- To restrict the use of loaned funds and protect the investor (correct)
- To offer pre-emptive rights to existing shareholders
Which security offers the highest reward with the highest risk?
Which security offers the highest reward with the highest risk?
- Common Stocks (correct)
- Retained Earnings
- Preferred Stocks
- Bonds
What is the primary difference between debt and equity financing?
What is the primary difference between debt and equity financing?
- Debt financing offers voting rights, while equity financing does not
- Debt financing requires collateral, while equity financing does not
- Interest rates on debt financing are higher than equity financing
- Debt financing involves repayment of borrowed capital, while equity financing does not (correct)
What is the benefit of retained earnings in a company?
What is the benefit of retained earnings in a company?
What is the primary advantage of using debt financing?
What is the primary advantage of using debt financing?
What is the purpose of collateral in a debt agreement?
What is the purpose of collateral in a debt agreement?
What is the primary purpose of the Sinking Fund Method in bond repayment?
What is the primary purpose of the Sinking Fund Method in bond repayment?
What is the main advantage of investing in a Mutual Fund?
What is the main advantage of investing in a Mutual Fund?
Which stock market index tracks the performance of 300 different stocks?
Which stock market index tracks the performance of 300 different stocks?
What is the main difference between the Primary and Secondary markets?
What is the main difference between the Primary and Secondary markets?
What is the purpose of a Convertible Bond?
What is the purpose of a Convertible Bond?
What does the P/E ratio indicate in stock market analysis?
What does the P/E ratio indicate in stock market analysis?
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