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![Increasing debt can be used as part of the financial strategy of the firm to
increase ROE
decrease cost of equity
change behavior/culture
decrease taxes
A and B
O A, B, and C
O A, C, and D
O All of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F633e5403-239a-44c3-8b31-a95657f5f0d1%2Ff4005759-18ff-43a5-b41f-311db7c47a1b%2Fawnx9n_processed.png&w=3840&q=75)
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- Help me pleaseWoeBeTide's chief objective is to meet its investment needs and maintain its target debt-equity ratio before paying dividends. WoeBeTide is following a dividend approach. Select one: a. cyclical b. stable C. compromise d. residual e. stochasticQuestion #5. When calculating the weighted average cost of capital (WACC), should we use marketvalues or balance sheet values as the weights of debt and equity? Explain your response
- The price/earnings ratio is commonly used by investors to OA. evaluate their ability to earn a return on their investment OB. determine the market value of the company OC. determine the market price per share of stock of a company OD. determine if the company has a low amount of debt1. Leverage involves using fixed costs to magnify the potential return to a firm. Explain the hedging (maturity matching) approach to financing 2. Illustrate the relationship between profitability, liquidity, and risk in the management of working capital.Select all that are true with respect to the cost of debt. Group of answer choices it is the return the firm needs to earn overall to satisfy all investors It is the rate the debt holders demand given the risk they face as debt holders Can be estimated using CAPM Cannot be estimated using CAPM because CAPM is used for estimating the cost of equity Is always equal to the YTM on a company's existing bonds Is lower than the YTM on a company's existing debt if there is default risk Can be proxied by the YTM on a company's existing debt if the debt is risk free Flag question: Question 7
- For a firm, the Optimal Capital Structure means to choose between equity and bonds so to a. Maximize funding needs b. Minimize the firm financing costs c. Minimize the firm available funding d. Maximize revenuesDiscuss how a financial manager can use ‘current ratio’ and ‘debt ratio’ in ratio analysis to better manage a firm.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
- Venture capital is a.debt resource b. Profit resource c. Internal financial resource d. External financial resourceWhich of the following statements is most correct? (Hint: Work Problem 4-16 before answering 4-17, and consider the solution setup for 4-16, as you think about 4-17.) a. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will raise the firm' expected return on common equity (ROE). b. The higher its tax rate, the lower a firm's BEP ratio will be, other things held constant. c. The higher the interest rate on its debt, the lower a firm's BEP ratio will be, other things held constant. d. The higher its debt ratio, the lower a firm's BEP ratio will be, other things held constant. e. If a firm's expected basic earning power (BEP) is constant for all of its assets and exceeds the interest rate on its debt, then adding assets and financing them with debt will decrease the firm's expected return on common equity (ROE).To identify the cost of equity, which models are better: The dividend growth model or CAPM-derived cost of equity?