____________ financing is the MOST expensive form of financing for a firm.   Question 7 options:   1)  Short-term debt   2)  Long-term debt   3)  Preference share   4)  Common share

Q: One of the major advantages of common stock financing is: I. equity capital requires a lower rate of…

A: Common stock refers to the equity shares of the company which are issued to the shareholders for…

Q: Which of the following statements is incorrect? Group of answer choices Unsystematic risk can be…

A: Introduction: Unsystematic risk is the risk that is specific to an industry and this risk is…

Q: When a company is financially geared, its debt is __________. Question 14 options: 1)…

A: The question is based on the concept of Ratio analysis

Q: quity is ________________ (more/less) risky than debt since equity holders receive a…

A: Equity is a source of partnership or ownership in the company and you are the owner of the company…

Q: What are the reasons that highly profitable firms use debt financing? 1 they have sufficient…

A: Bank is an institute which gives umbrella when sky is clear but sits back when its raining. So…

Q: What is the significance of the equity breakpoint?   Question 9 options:   Once a firm has spent…

A: Retained earnings are used as a source of funding before any new stocks are issued. This is because,…

Q: A. When retained earnings are exhausted, the MCC breaks upward. What happens if the firm continues…

A: Retained Earnings refer to that part of net income or profit that is just leftover after making…

Q: 5 What are the different financing options for a business? Is there any standard or easily…

A: Introduction:- (1) Financing a business is an important step for any entrepreneur. There are a…

Q: The pecking-order theory of capital structure implies that firms will always prefer to issue debt…

A: Capital structure Capital structure refers to the relationship between long-term forms of financing…

Q: Even if no share of stock issues of bond are sold, a firm still incurs a cost of internall equity or…

A: Variable cost is the cost incurred for per unit produced, whereas fixed cost is independent of units…

Q: Suppose a firm maintains its preferred debt-equity and pays dividends only after meeting its…

A: Company with growth opportunities available distribute dividend after meeting the requirements of…

Q: What is the meant beta (β)? How would you interpret if β=1, β>1 and β<1? (6 marks)

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: Question 27 Which of the following is NOT a potential use of Free Cash Flow to the Firm (FCFF)? Pay…

A: The concept of Free Cash Flow to the Firm (FCFF) is an important financial metric that measures the…

Q: True or False:

A: Explanations: 1. Total capital of the firm depends upon the types of capital a firm has issued.…

Q: 1. What are the primary advantages of private equity? C a. High capital requirements b. None of the…

A: Private equity is a form of financing in which investors and funds directly invest in the private…

Q: A firm's overall cost of capital that is a blend of the costs of the different sources of capital is…

A: There are several sources of funds available for a business- retained earnings, equity, or debt.…

Q: A problem of financing with debt ( bonds) is that Group of answer choices the price of new bond…

A: The question is asking about the potential problems or challenges that can arise when a company…

Q: 3. The cost of preferred stock Preferred stock is a hybrid security, because it has some…

A: The various funding sources like debt, preferred stock, and equity that makes up a firm's capital is…

Q: What is "dry powder" considered in Private Equity? interest rate movement O capital available to…

A: What is dry powder considered in Private Equity?Answer: Capital available to deployExplanation:In…

Q: Which ONE of the following best describes the value of the debt issued by a company? The value of a…

A: Debt issuance refers to the process of a company or organization raising capital by issuing debt…

Q: If debt and equity can be modeled as options on the firm’s assets, then the firm's shareholders have…

A: If debt and equity can be modeled as options on the firm’s assets, then the firm's shareholders have…

Q: Tell whether the following is a characteristic of stocks and bonds. 1. It can be appropriate for…

A: Stocks and bonds are the form of capital where the company issues for raising funds for its…

Q: Bncorrect. Ca) AS and dede becomes firm borrows more risky.both sharcholder and bandhedders domanl…

A: Modigliani- Miller Theorem is considered the most important theorem in finance which was developed…

Q: 13. Firm X has both convertible debt and equity in its capital structure. If investors of the…

A: Debt is representation of fixed obligation of company and it will increase the risk on equity…

Q: Which of the following will increase a firm's aftertax cost of debt financing? Select one: a.…

A: Cost of debt is usually computed on an after tax basis. This is because the interest expenses are…

Q: QUESTION 4 Which of the following statements is correct? O A. The tax benefit from using debt…

A: The leverage of the firm indicates the level of debt employed by the organization. If the usage of…

Q: How can you estimate the business risk of a firm?

A: Beta is the systematic risk. As a company opts to make decision to the best of interest, it is…

Q: Which of these selections best describes a bond investment strategy designed to provide the investor…

A: Bonds are debt securities issued by governments, municipalities, and corporations to raise capital.…

Q: A disadvantage of equity financing

A: Equity financing refers to raising finances in the form of selling equity shares of the concerned…

Q: Companies are financed in two ways, either with equity or debt financing.’ Considering the above…

A: Debt financing is the act of raising funds by selling bonds, taking out loans, or other forms of…

Q: To the extent that shares sold during an IPO are discounted from their appropriate price, the…

A: The objective of the question is to determine whether the statement is true or false. The statement…

Q: o. Compare and contrast different methods of capital reconstruction, such as share buybacks,…

A: Capital reconstruction refers to the process by which a company reorganizes its capital structure,…

Q: The best definition of capital markets is Select one: a. The possibility of conflicts between…

A: An exchange where shares, bonds, debentures, debt securities, and ETFs can be traded is known as a…

Q: If you want to value a firm, you would discount the projected free cash flows to all debt and equity…

A: When valuing a firm, typically use the concept of discounted cash flows (DCF) to estimate its…

Q: MM Proposition II states that: I) the expected return on equity is positively related to leverage;…

A: MM has given two basic proposition one is related to value of firm and second is about the cost of…

Q: A sound capital structure is a proper mix of debt and equity that helps to: a. Maximize the value of…

A: The capital structure consists of equity and debt used by the company to finance the operation and…

Q: Which of the following companies will have the highest capacity for debt assuming all other factors…

A: Lenders evaluate credit criteria to decide whether or not to approve a new loan. Although each…

Q: As per which approach of the capital structure, the overall cost of capital is unchanged because of…

A: As per the net operating income approach, the firm's overall cost of capital is not affected by the…

Q: Which of the following statements about Capital structure is not true Select one: a. None of the…

A: Capital structure is the proportion of funds to be financed by various types of sources of funds.…

Q: Under which condition an external equity financing can be advantageous? Group of answer choices…

A: Raising funds via external equity means raising funds via equity share capital to finance the assets…

Q: Modern capital structure theory, constructed by Modigliani and Miller, began in 1958 and provided a…

A: Part 1) The cost of equity will always remain higher than the cost of debt.  In simple words, the…