19 Consider the following limit-order book for FinTrade stock. The last trade in the stock occurred at a price of $91. Limit Buy Orders Price Shares 500 400 500 $ 90.75 90.50 90.25 90.00 89.50 Price 200 600 Price Limit Sell Orders a. If a market buy order for 100 shares comes in, at what price will it be filled? (Round your answer to 2 decimal places.) Price $ 91.25 91.50 94.75 98.25 O Increase Shares 100 b. At what price would the next market buy order be filled? (Round your answer to 2 decimal places.) Decrease 100 300 100 c. If you were a security dealer, would you want to increase or decrease your inventory of this stock?
Cost of Capital
Shareholders and investors who invest into the capital of the firm desire to have a suitable return on their investment funding. The cost of capital reflects what shareholders expect. It is a discount rate for converting expected cash flow into present cash flow.
Capital Structure
Capital structure is the combination of debt and equity employed by an organization in order to take care of its operations. It is an important concept in corporate finance and is expressed in the form of a debt-equity ratio.
Weighted Average Cost of Capital
The Weighted Average Cost of Capital is a tool used for calculating the cost of capital for a firm wherein proportional weightage is assigned to each category of capital. It can also be defined as the average amount that a firm needs to pay its stakeholders and for its security to finance the assets. The most commonly used sources of capital include common stocks, bonds, long-term debts, etc. The increase in weighted average cost of capital is an indicator of a decrease in the valuation of a firm and an increase in its risk.
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