of stion According to MM Case II, if the expected return on assets decreases, what happens to the expected return on equity? Select one: Oa increases O b. remains constant Oc decreases O d. depends on the firm's capital structure Time le
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- Which of the following results from the early repayment of debenture capital by a firm a. The DOL increases b. The DOL decreases c. The DFL increases d. The DFL decreasesThe ______________on capital is called Cost of capital Select one: a. Average expected return b. Low expected return c. Normal expected return d. None of the option e. High expected returnWhich of the following formulas is INCORRECT? O A. Div = EPS, X Dividend Payout Rate OB. TE= (Div/P)+g OC. PN(Eg) × Div N+1 O D. earnings growth rate= retention rate x return on new investment
- What does standard deviation measure? A. The holding period B. The gain on the investment C. Risk D. The amount of dividend #####################When the cost of capital increases, value of the firm Select one: a. No Change b. Increases c. Decreases d. ConstantIn the Discounted Cash Flow Model (aka. Dividend Valuation Model) for cost of equity, if an asset has no expected dividend, its expected return would be best described as the _________. (A).dividend yield. (B).market risk premium. (C).expected market return. (D).capital gains yield
- Holding assets constant, if debt increases, A. The firms ROA declines B. The firms net income would increase C. The firms leverage ratio increases D. The firms ROE declinesIf a firm increases its leverage, which extended Du Pont equation ratio is directly affected? a. ROS b. Equity Multiplier c. Total Asset Turnover d. ROA3-When the cost of capital increases, value of the firm Select one: a. Increases b. No Change c Decreases d. Constant
- according to capm the expected return on equity includes a reward for: a. market risk and specific risk b. Specific risk only c. Time value of money and market risk d. Diversification and portfolio risk e. Time value of money and specific riskWhich 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 dividendsIf the duration gap is zero, then the market value of equity is ____________ interest rates.A. increased due to an increaseB. increased due to a decreaseC. decreased due to an increaseD. immunized from changes
