In calculating the value of a firm's equity which of the following is incorrect? Multiple Choice O O The market value of equity should be used as opposed to the book value The value of equity represents the value of the firm less the value of debt A premium is usually paid for equity with higher liquidity D A discount is usually given for controlling interest in a company.

In calculating the value of a firm's equity which of the following is incorrect? Multiple Choice O O The market value of equity should be used as opposed to the book value The value of equity represents the value of the firm less the value of debt A premium is usually paid for equity with higher liquidity D A discount is usually given for controlling interest in a company.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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The higher the firm's flotation cost for new common equity, the more likely the firm is to use preferred stock, which has no flotation cost, and reinvested earnings, whose cost is the average return on the assets that are acquired. Group of answer choices True False
which one is correct please confirm? QUESTION 37 Which of the following statements is true concerning companies that do not pay dividends? a. The cost of equity capital can be estimated using the Capital Asset Pricing Model. b. The cost of equity capital is equal to the growth short-term rate of earnings per share. c. The dividend capitalization model can be used to determine an accurate cost of equity capital. d. None of these are correct
The NZ Equity market is illiquid, both in the primary and secondary markets. What does market illiquidity mean? What are the reasons for the low liquidity? How might equity market liquidity be improved?
The market-to-book ratio is the ratio of a firm that reports negative retained earnings on its equity statement is less than one (i.e, market value of equity is less than book value of equity) True OR False
Q.A low debt ratio, compared to other industry competitors with similar operating leverage, most likely means the firm has A. a higher cost of capital than the competition. B. a higher EVA than the competition. C. a lower bond rating than the competition. D. none of the above.
A company that is leveraged is one that O a. contains debt financing so as to increase the return on an investment. O b. contains equity financing. O c. contains no debt financing. O d. has a high earnings per share.
All the statements are incorrect regarding current ratio except? a. The more predictable a firm's cash flows, the higher the acceptable current ratio. b. A higher current ratio indicates a higher return on equity. c. The more predictable a firm's current ratio, the higher the clyrent liabilities. d. A higher current ratio indicates a greater degree of liquidity.
Which of these would best improve a firm's liquidity position? *a. Lower profitabilityb. Higher capital spendingc. Higher need for noncash current assets on the balance sheetd. Declaration of stock dividends
M-M theroy with perfect market suggests that divident payment: A.It dependes on the company's capital structure and retained earnings B.Has a positive impact on the value of a firm C.Has a negative impact on the value of a firm D.Has no impact on the value of a firm
Which of the following is a difference between stocks and bonds? Select one: a. cash flows to bondholders are not known and not promised, cash flows to stockholders are known and promised b. companies issue stocks to grow the company and issue debt to pay bills c. required returns on debt are typically lower than required returns on equity d. dividends are legal obligations of the firm; coupons are not. Clear my choice
Choose the best answer Between equity and debt capital a.Equity is riskier than debt b.Debt is safer than equity c.Both debt and equity are equally risky d.No option is correct
Although the equity method is a generally accepted accounting principle (GAAP), recognition of equity income has been criticized. What theoretical problems can opponents of the equity method identify? What managerial incentives exist that could influence a firm’s percentage ownership interest in another?

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