Principals of Finance

Pdr

21. Which of the following is a source of short-term financing? Group of answer choices Issue New Stock Issue Long Term Bonds Factoring Accounts Receivable   22 A qualitative factor (as opposed to a quantitative factor) that managment should consider when evaluating alternative capital investments would be Group of answer choices projected net cash flows The corporate strategy economic returns and IRR estimated costs

Elon is a financial manager with Wealth Creation, an investment advisory company. He must select specific investments, for example, stocks and bonds from a variety of investment alternatives. Which of the following statements is most likely to be the objectiuve function in this scenario? Your choice: Maximization of tax dues Maximization of expected return Minimization of the number of stocks held Maximization of investment risk Submit 3/6 Qs

Which of the following businesses are most exposed to interest rate risk? *       A. A company with a high equity to debt ratio       B. A company with a large amount of floating rate debt       C. An al-equity company       D. An investment company with an investment portfolio that matches its investment horizon.

Subject:- finance

The relationship between WACC and investors' required rates of return The required rate of return of an investor is the rate of return that an investor demands to purchase a firm’s stocks or bonds and thus provide funds for capital investment. Therefore, required returns from the investors’ point of view correspond to the required returns or the weighted average cost of capital (WACC) from the firm’s point of view. Indicate in the following table whether each of the statements about WACC and the required rates of return of investors is true or false. Statement True False Flotation costs increase the cost of newly issued stock compared to the cost of the firm’s existing, or already outstanding, common stock or retained earnings.       The firm’s cost of debt is what an investor is willing to pay for the firm’s stock before considering flotation costs.       The amount that an investor is willing to pay for a firm’s bonds is inversely related to the…

What is the blend of long-term financial sources used to finance the firm which may include debt, equity ?and preferred stock اخترأحد الخیارات a. Working Capital O b. Profit Maximization c. None of the option d. Risk and Return e. Capital Budgeting O

If a firm cannot invest retained earnings to earn a rate of returngreater than or equal to   the required rate of return on retained earnings, it should return those funds to its stockholders.   The cost of equity using the CAPM approach The current risk-free rate of return (rRFrRF) is 4.67% while the market risk premium is 5.75%. The Burris Company has a beta of 0.78. Using the capital asset pricing model (CAPM) approach, Burris’s cost of equity is     .   The cost of equity using the bond yield plus risk premium approach The Taylor Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company’s cost of internal equity. Taylor’s bonds yield 11.52%, and the firm’s analysts estimate that the firm’s risk premium on its stock over its bonds is 3.55%. Based on the bond-yield-plus-risk-premium approach, Taylor’s cost of internal equity is: 18.84%   15.07%   14.32%   18.08%     The…

Leverage and the Capital Structure.  Why is the use of debt financing referred to as financial “leverage?”  What is the basic goal of financial management with regard to the capital structure?  Is there an easily identifiable debt-equity ratio that will maximize the value of a firm?  Why or why not?

Which of the below statements does the MM Proposition I predict? A. In a perfect market, the value of a firm is independent of its capital structure B.In a perfect market, the discount rate depends on the capital structure C.In a perfect market, the value of a firm decreases in leverage D.In a perfect market, the NPY of investments depends on the existing debt/equity mix