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- Explain the relationship between return on equity (ROE), return on asset (ROA), and leverage effect. Please define these terms before discussion.The required rate of return on equity is the most appropriate discount rate to use when applying a ______ valuation model. A. FCFE B. DDM C. FCEF or DDM D. P/E E. FCEFExplain the Leverage and the Incremental Cost of Debt with example?
- The yield on a savings account is also referred to as Select one: of O A. liquidity. O B. compounding. zion O C. rate of return. O D. asset management. O E. insolvency.Define each of the following terms:a. Capital; capital structure; optimal capital structureb. Business risk; financial riskc. Financial leverage; operating leverage; operating breakevend. Hamada equation; unlevered betae. Symmetric information; asymmetric informationf. Modigliani-Miller theoriesg. Trade-off theory; signaling theoryh. Reserve borrowing capacity; pecking orderi. Windows of opportunity; net debtDefine each of the following terms:l. Interest rate risk; maturity risk premium (MRP); reinvestment rate risk
- How is the impact of uncertainty reflected in a discounted cash flow (DCF) analysis?a) Debt/equity mixb) Discount ratec) Income tax rated) Interest coverage ratioExplain an example of Return on equity.Which are valid methods for finding the cost of equity? Check all that apply: 1. The dividend discount model approach 2. The perpetuity approach 3. The YTM approach 4. The CAPM or SML approach
- Carrying amounts in a GAAP balance sheet are measured using all the following except: Multiple Choice historical cost. net realizable value. discounted present value. projected ROI.Total debt-to-assets ratio, debt-to-equity ratio and Long-term debt-to-capital ratio are examples of what type or category of ratios? a. Activity O b. Profitability O c. Liquidity O d. LeverageThe debt ratio is used primarily as a measure of: Short-term liquidity. Profitability. Creditors' long-term risk. Return on Investment.
