MODULE 15 SET

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P1  M&M Proposition 2 states that the cost of a firm's common stock is directly related to the debt-to-equity ratio. both the debt-to-equity ratio and the required rate of return on the firm's underlying assets. the return of the market index. the required rate of return on the firm's underlying assets.

Question 6 According to the Capital Asset Pricing Model (CAPM), underpriced securities: A) above the SML B under the SML C expected return will rise D share price will fall 1

25- The minimum rate of return a firm must earn on its assets to maintain the currentvalue of its securities is represented by which of the following? a. Cost of equityb. Pretax cost of debt c. After-tax cost of debtd. Weighted average cost of capitale. Weighted average cost of preferred and common stock

which one is correct please confirm? QUESTION 7 The cost of equity capital for non-dividend paying stocks can be determined by ____. I. using the Capital Asset Pricing Model II. estimating ke  for comparable dividend-paying stocks in their industry   a. Only statement I is correct.   b. Only statement II is correct.   c. Both statements I and II are correct.   d. Neither statement I nor II is correct.

Question 19 Which of the following statements / combinations are correct regarding the Optimal Capital structure of a firm? I. II. III. The optimal capital structure always calls for a debt/assets ratio equal to the one that maximizes expected EPS. An increase in financial leverage used by a firm will always increase the risk and the expected rate of return on equity, thus pushing the firm's stock price to fall. A. I and II B. I, II and III Managers at a firm choose a capital structure so that the mix of securities making up the capital structure minimizes the cost of financing the firm's activities. The optimal capital structure maximizes the total value of the overall value of the firm IV. C. I only D. I, II and IV E. II only

The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover

How does a firm’s dividend policy affect each of the following?b. The likelihood that its convertible bonds will be converted

41) Balancing the advantages and disadvantages of using debt and equity when determining a firm’s optimal capital structure is referred to as:   Question 41 options:   Tax theory   Trade off theory   Signaling theory   Pecking order theory1

What is a firm’s cost of capital? Include discussions about debt, preferred stock, common stock and retained earnings. Keep in mind that the cost of capital is rate of return required by investors for a firm’s securities. When would you use debt, preferred stock, common stock or retained earnings?

Question 21

For an unlevered​ firm, the cost of capital can be determined by using the​ ________.   A. Preferred stock yield   B. Yield to maturity on the traded debt   C. Capital Asset Pricing Model   D. Dividend yield

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

In Business Finance, we observe a shareholder's required return on a common stock investment because O it is used to predict the cashflows from a capital expansion O it is inversely related to the same firm's bond price O it is an estimate of the cost of equity funding for a corporation O it is the cost of borrowing for the firm K

What does the capital asset pricing model (CAPM) calculate?   a. The expected rate of return on an individual stock with respect to the risk-free rate of return b. The expected rate of return of an individual stock based on its overall risk c. The expected rate of return of an individual stock with respect to its market risk only d. The expected rate of return of an individual stock reflecting its financial risk Clear my choice

What is "dry powder" considered in Private Equity? interest rate movement O capital available to deploy O platform for firms

The cost of capital can be thought of as the rate of return required by investors in the firm's securities. O a. false O b. true

13. Firm X has both convertible debt and equity in its capital structure. If investors of the convertible debt decide to convert into the firm's equity, the risk of the firm's equity C. remains unchanged A. increases B. decreases D. may decrease or increase depending on the interest rate paid on the convertible debt