26. Will a firm always want a current ratio greater than one to manage its business?
27. With Financial Leverage, a firm is looking at its fixed operating costs vs. its borrowing costs to determine leverage opportunities.
28. A full underwriting of a new public issue will ensure that the firm issuing the new securities will attain all of its capital required through the underwriting.
29. Futures contracts operate the same as forward contracts in managing risk, even though they have set maturities and contract sizes.
30. An investor will never put a cap on a variable interest product so as not to limit the amount of interest one could earn.
31. Companies will put a collar on their interest rate exposure (in relation to their borrowings) in order to fix a range of interest the firm will pay.
32. If the bid/offer rate of the US/Euro is 1.43 to 1.45 and the firm is buying Euros for dollars, the rate given by the bank will be 1.45.
33. It is potentially very costly for a firm to carry large cash balances on the balance sheet.
34. Interest Rate Parity allows a company to lock in profits by borrowing in the low-interest rate currency and investing in the high-interest rate currency.