1. Equity accounts. The authorized share capital of the Alfred Cake company is 100,000 shares. The equity is currently shown in the company's books as follows:
2. common stock (1.00 par value) $60,000
3. additional paid – in capital $10,000
6. Treasury stock (2,000 shares) $5,000
a. How many shares are issued? 60,000
c. How many more shares can be issued without the approval of shareholders? 40,000
a. Debt maturing in more than 1 year is often called term loan debt.
b. An issue of bonds that is sold simultaneously in several counties is traditionally called a Eurobond.
c. If a lender ranks behind the firm's general creditors in the event of default, the loan is said to be subordinated.
d. In many cases a firm is obliged to make regular contributions to a sinking fund which is then used to repurchase bonds.
e. Most bonds give the firm the right to repurchase or call the bonds at specified prices.
f. The benchmark interest rate that banks charge to their customers with good to excellent credit is generally termed the prime rate.
g. The interest rate on bank loans is often tried to short-term interest rates. These loans are usually called floating-rate loans.
h. Where there is a private placement securities are sold directly to a small group of institutional investors. These securities cannot be resold to individual investors. In the case of a public issue, debt can be freely bought and sold by individual investors.
i. A long-term rental agreement is called a lease.
j. A convertible bond can be exchanged for shares of the issuing corporation.
k. A warrant gives its owner the right to buy shares in the issuing company at a predetermined price.
5. Preferred stock. In what ways is preferred stock like long-term debt? In what ways is it like common stock? Preferred stock is similar to lon
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