Joe owns a few collectible cars from the 1950's. He has decided to go solar and needs money to finance the new solar system and installation. Joe decides to sell one his cars to get the financing he needs. This is an example of? O Equity Financing O Debt Financing O Liquidiity Financing O Abraham Lincoln

Joe owns a few collectible cars from the 1950's. He has decided to go solar and needs money to finance the new solar system and installation. Joe decides to sell one his cars to get the financing he needs. This is an example of? O Equity Financing O Debt Financing O Liquidiity Financing O Abraham Lincoln

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter17: Financial Markets

Section: Chapter Questions

Problem 1SCQ: Answer these three questions about early-stage corporate finance: Why do very small companies tend...

See similar textbooks

Similar questions

Explain the main two types that the company could prefer to use them as a source of finance
Q. 2. Salma receives $1,00 as a gift on her tenth birthday. She decides to invest it in a 5- year-CD whose proceeds she plans to use when fifteen as down payment to huy her first car. She has heard that credit unions usually pay higher interests than banks. She can invest with one of the two local credit unions; one afiliated to her father's company and the other to her mother's. The former offers 12.5% interest per year compounded unnually, while the latter 12% per year compounded monthly. Which credit union should she invest with?
If you are a banker and expect interest rates to rise inthe future, would you prefer to make short-term loansor long-term loans?
Suppose you are in charge of the financial departmentof your company and you have to decide whether toborrow short or long term. Checking the news, yourealize that the government is about to engage in amajor infrastructure plan in the near future. Predictwhat will happen to interest rates. Will you advise borrowing short or long term?
If you owned a small firm that had become somewhat established, but you needed a surge of financial capital to cant out a major expansion, would you prefer to raise the funds through borrowing or by issuing stock? Explain your choice.
Answer these three questions about early-stage corporate finance: Why do very small companies tend to raise money from private investors instead of through an IPO? Why do small, young companies often prefer an IPO to borrowing from a bank or issuing bonds? Who has better information about whether a small firm is likely to earn profits, a venture capitalist or a potential bondholder, and why?
Which has a higher average return over time: stocks, bands, or a savings account? Explain your answer.
What are the- most common ways for start-up firms to raise financial capital?
FF (store grain; 20% losses) 150- FF (lend at 10%) „FF (invest grain; 50% return; borrow at 10%) „FF (invest grain; 50% return) 110- 80- 62 60 Investing it all - and borrowing Investing "Lending Storing 136 39+ 26- 606568 80 100 Consumption now ($) Marco's endowment Select one or more: U a. Marco can reach point J by borrowing against his future income. O b. Borrowers are always worse off than lenders. O c. Investing all his endowment and simultaneously borrowing is Marco's best option. O d. At point J, Marco's marginal rate of substitution is 1.1. O e. At point H, Marco has an MRS of 0.8. O f. The diagram shows that borrowing against returns on future investment is always rational, if the bank will lend you the money. g. If Marco cannot borrow and cannot invest a rise in the interest rate makes him better off. If he can invest and borrow a rise in the interest makes him worse off. O h. If Marco can invest and borrow he will choose to borrow $136.36, the present value of $150.…
What is the role of a shareholder in a corporation?
As and example of a possible investment restriction, an insurer mah only be allowed to invest up to 20 percent of its assets in common stock. What penalty is imposed upon the insurer that invests 30 percent of available assets in common stock?A. The additional 10 percent must be disposed of by year endB. The state regulators would impose a 10 percent fine on the insurer.C. The additional 10 percent would be a nonadmitted asset.D. The additional 10 percent would only be listed at cost.
What is market making? How do investment banks make a profit in market making?