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Principles of Finance 6th Edition Besley Test Bank
Principles of Finance 6th Edition Besley Test Bank
Principles of Finance 6th Edition Besley Test Bank
Test Bank
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Principles of Finance 6th Edition Besley Test Bank
Principles of Finance, 6e
Besley/Brigham
Chapter 02
1. Which of the following events would make it more likely that a company would choose to call its outstanding callable
bonds?
a. A reduction in market interest rates.
b. The company's bonds are downgraded.
c. An increase in the call premium.
d. Answers a and b are both correct.
e. Answers a, b, and c are all correct.
ANSWER: a
RATIONALE: Statement b is false because a bond downgrade generally raises the cost of issuing new
debt. Therefore, the callable bonds would not be called. Statement c is false since the
call premium, the cost paid in excess of par, increases the cost of calling debt.
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Callable Bonds
2. Other things held constant, if a bond indenture contains a call provision, the yield to maturity that would exist without
such a call provision will generally be ____ the YTM with it.
a. Higher than
b. Lower than
c. The same as
d. Either higher or lower, depending on the level of call premium, than
e. Unrelated to
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Call Provision
3. Of the following provisions that might be found in a bond indenture, which would tend to reduce the coupon interest
rate on the bond in question?
a. A subordination clause in a debenture.
b. A call provision.
c. A convertible feature.
d. Having relatively few restrictive covenants.
e. All of the above.
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 02
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Bond Indenture
4. The terms and conditions to which a bond is subject are set forth in its
a. Debenture.
b. Underwriting agreement.
c. Indenture.
d. Restrictive covenants.
e. Call provision.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Bond Indenture
5. All of the following may serve to reduce the coupon rate that would otherwise be required on a bond issued at par,
except a
a. Sinking fund.
b. Restrictive covenant.
c. Call provision.
d. Change in rating from Aa to Aaa.
e. None of the above (all may reduce the required coupon rate).
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Bond Coupon Rate
6. Which of the following factors does not influence a firm's long-term financing decisions?
a. Its target capital structure.
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Principles of Finance, 6e
Besley/Brigham
Chapter 02
b. Maturity matching considerations.
c. Comparative costs of financing alternatives.
d. Availability of collateral.
e. All of the above factors may influence a firm's long-term financing decisions.
ANSWER: e
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-5 - Knowledge
Business Program-6 - Reflective Thinking
DISC-FIN-03 - Capital Budgeting and Cost of Capital
Time Estimate-a - 5 min.
TOPICS: Long-Term Financing
7. Common equity refers to the sum of which of the following balance sheet accounts?
a. Common stock and retained earnings
b. Book value, retained earnings, and common stock
c. Common stock, additional paid-in capital, retained earnings
d. Either answer a or c above could be correct depending on whether the firm has "par" or "no par" stock.
e. Both b and c are correct since additional paid-in capital is equivalent to book value.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
ACCREDITING STANDARDS: Blooms Taxonomy-3 - Comprehension
Business Program-6 - Reflective Thinking
DISC-FIN-01 - Stocks and Bonds
Time Estimate-a - 5 min.
TOPICS: Common Equity
© 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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Dish in a timbale and serve very hot.
N.B.—When put into the sauce, the vegetables cook much less quickly than
in boiling water. In the Navarin, moreover, they are cooked by means of
gradual penetration; thus, by slackening the cooking speed of the Navarin,
they are cooked to the required extent.
HOUSE LAMB.
1355—BARON (OR PAIR OF HIND-QUARTERS) OF LAMB
1356—DOUBLE (OR PAIR OF LEGS) OF LAMB
1357—QUARTER OF LAMB
1358—FILLET OF LAMB
1359—SADDLE AND NECK OF LAMB
Large joints of lamb for Relevés are cut like those of mutton.
One joint, however, should be added, which is “The Haunch”; and this
consists of one leg and half the loin attached.
Large joints of house lamb should be poëled or roasted. Their most suitable
adjunct is either their own stock, or a thickened, highly seasoned and clear
gravy.
House Lamb Relevés are chiefly garnished with early-season or new
vegetables; but all the garnishes given under Mutton Relevés may also be
served with them, provided the difference in size be taken into account. In
addition to these garnishes, saddle of lamb admits of all the preparations
given under saddle of veal (Nos. 1181 to 1191).
1370—CUTLETS
According to custom, lamb cutlets are usually served like “Noisettes,” i.e.,
two are allowed for each person.
As a rule, when they are to be grilled, they are previously dipped in melted
butter and sprinkled with fine bread-crumbs.
When they are to be sautéd they are treated à l’anglaise (egg and bread-
crumbs) except when, subject to their mode of preparation, they have to be
served plain or stuffed.
1378—EPIGRAMMES D’AGNEAU
A lamb “epigram” consists of a cutlet, and a piece of braised breast, cooled
under slight pressure and cut to the shape of a heart of the same size as the
cutlets. The cutlets and the pieces of breast must be treated à l’anglaise, and
sautéd or grilled according to circumstance.
Epigrams should be dished in a circle, the cutlets and the pieces being
alternated.
They are usually garnished with braised chicory, or macédoines of early-
season vegetables.
1379—RIS D’AGNEAU
Lamb sweetbreads are, according to circumstances, either used as the
principal constituent of various preparations, or they answer the purpose of
a garnish.
Due allowance having been made for their particular size, they may be
treated after the same manner as veal sweetbreads; that is to say, once they
have been cleared of blood, they are blanched and braised according to the
nature of the selected mode of preparation.
If they are to form part of a large garnish, cohered by means of a brown
sauce, they are braised brown and glazed. If they stand as an adjunct to
poached fowl, they may be either studded or left plain, and braised white.
Apart from their two uses as principal and garnishing constituents, the
undermentioned methods of preparation, explained in the various preceding
series, may be applied to them; viz.:—
Attereaux, Brochettes, Croustades, Pâté chaud, Vol au vent, &c.
1381—PILAW D’AGNEAU
Proceed exactly as explained under “Pilaw de Mouton” (No. 1354), only
bear in mind that the time allowed for cooking should be proportionately
shortened in view of the greater tenderness of lamb’s meat.
1382—CURRIE D’AGNEAU
Proceed as for “Currie de Mouton,” after duly allowing, as above, for the
greater tenderness of the meat.
PORK
R E .
1392—PORK PIE
Completely line the bottom and sides of a pie-dish with thin slices of raw
ham, and prepare, for a medium-sized dish:—(1) one and one-half lbs. of
fresh pork in collops, seasoned with salt and pepper, and sprinkle with two
tablespoonfuls of dry Duxelles (No. 223), a pinch of parsley and another of
chopped sage; (2) one and one-half lbs. of raw, sliced potatoes, and one
large, chopped onion.
Garnish the bottom of the dish with a litter of collops; cover with potatoes
and onions; spread another litter of collops, and begin again in the same
order. Add one-quarter pint of water; cover with a layer of fine paste or
puff-paste trimmings, which should be well sealed down round the edges;
gild with beaten egg; streak the paste with the prongs of a fork; make a slit
in the centre of the covering of paste for the escape of steam, and bake in a
moderate oven for about two hours.
F - C .
1397—SUCKING PIG
Stuffed or not stuffed, sucking pigs are always roasted whole, and the
essential point of the procedure is that they should be just done when their
skin is crisp and golden.
While cooking, they should be frequently basted with oil; the latter being
used in preference to any other fatty substance owing to the greater
crispness it gives to the skin of the sucking pig.
Serve a sauceboat of good gravy at the same time.
1399—ZAMPINO DE MODÈNE
Zampino, or stuffed leg of pork, is a product of Italian pork-butchery.
It is cooked like a ham, after having been tied in a napkin lest its skin burst.
Served hot, it is accompanied by a Madeira or tomato sauce, a garnish of
boiled, braised, or gratined cabbages; of French beans, or of potato purée.
1400—ZAMPINO FROID
Zampino is served cold, alone or mixed with other meats; but it is used
more particularly as a hors-d’œuvre. For this purpose, cut it into the
thinnest possible slices.
1401—OREILLES A LA ROUENNAISE
After having singed and well cleaned the inside of the pig’s ears, cook them
in water, salted to the extent of one-third oz. of salt per quart, together with
a garnish of vegetables as for pot-au-feu. This done, cut them across in
suchwise as to have the end where the flesh is thickest on one side, and the
thinnest end on the other side of the strips.
Chop up the thick portion; cut the other into collops, and put the whole into
a saucepan with one-quarter pint of half-glaze with Madeira.
Cook gently for thirty minutes. This done, add to the minced ears, one and
one-half lbs. of sausage meat and a pinch of chopped parsley. Divide up the
whole into portions, weighing three oz; wrap each portion in a piece of
pig’s caul, insert a collop of ear into the wrapping, and give the latter the
shape of ordinary crépinettes. Grill gently, until the cooking is three-parts
done; sprinkle with butter and raspings, and complete the cooking of the
crépinettes, colouring them in so doing.
Dish in a circle, and serve a Madeira sauce at the same time.
B .
1407—BOUDINS NOIRS
Make the following preparation, putting the various ingredients into a
basin:—One lb. of very fresh pork fat, cut into large dice, and half-melted;
one sixth pint of thick cream; two eggs; six oz. of chopped onions, cooked
in lard without colouration; two-thirds oz. of salt, a pinch of pepper, and a
little spice; a pinch of wild-thyme leaves, and a leaf of bay, both chopped.
Mix the whole well with one pint of blood of pork, and put it into the gut
without over-filling it, for it should be borne in mind that the preparation
swells in poaching.
Set the boudins on willow lattices or baskets; plunge them into boiling
water, and, from that time, keep the latter at 203° F.
Let them poach for twenty minutes, and remember to prick all those that, by
rising to the surface, show they contain air, which might burst their skins.
When about to serve them, cisel them on both sides, and grill them very
gently.
They are generally accompanied by a potato purée with cream.
1410—CRÉPINETTES TRUFFÉES
Add to two lbs. of very good sausage-meat, four oz. of chopped truffles,
and two tablespoonfuls of truffles cooking-liquor. Mix the whole well;
divide into portions weighing two and one-half oz., and wrap each portion
in a square of pig’s caul. Shape the crépinettes thus formed rectangularly.
Sprinkle with melted butter, and grill gently.
Dish them in a circle; pour a Périgueux sauce in their midst, and serve a
potato purée with cream separately.
1411—CRÉPINETTES A LA CENDRILLON
Prepare the crépinettes as above; wrap them in a double sheet of buttered
paper; over them set a heap of cinders covered with burning embers, and
keep the latter alive for a space of twenty minutes, when the cooking
operation should be completed.
Formerly, the above was the mode of procedure, but nowadays the
crépinettes are merely enveloped, each in an oval layer of paste. They are
then gilded, their tops are streaked, and, after having been laid on a tray,
they are baked in a warm oven for twenty minutes.
This done, they are dished on a napkin.
1412—SAUCISSES ANGLAISES
The most well-known of English sausages are those of Cambridge.
They are cooked like the French kind, and they are often served at
breakfasts as an adjunct to bacon. Sometimes, too, they serve as a garnish to
roast fowls, young turkeys, &c.
Their seasoning is often excessive.