Which of the following statements is false?

Q: Leveraged buyouts are usually done: a). When a company has a small debt load. b) After the stock…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Kidman corporation is trying to raise capital. What method would be the least risky to raise capital…

A: The credit ratings provide information about the creditworthiness of a company or an individual.

Q: One advantage of using leverage is that it allows the original owners of the firm to maintain their…

A: Financial leverage of a company suggests that the company has debt along with equity in its capital…

Q: What are some of the risks an investor would face when investing in a stock? In addition to the…

A: Explanation:- The chance or possibility of experiencing damages in relation to the projected returns…

Q: Let us choose the RIGHT statement: O Leveraged Buyout (LBO) increases business risk of the acquired…

A: A company's average after-tax cost of capital from all sources, including common stock, preferred…

Q: For each of the four questions below, identify whether the statement made in each question is…

A: NPV NPV is the most widely used method of capital budgeting to calculate the profitability of a…

Q: Which of the following is an incentive for firms to conduct an IPO? Underwriter and advisor fees…

A: IPO is a process in which the company raises funds by selling its shares to the public for the first…

Q: You are conerned about one of the assets in your fully diversified portfolio. You just have an…

A: 1) CFO cash mixing is a company-specific hazard and can be diversified by a well-diversified…

Q: It is quite often we observe some firms takeover target firms from a different industry. If…

A: Diversified acquisition means those acquisitions in which the company acquires the other company to…

Q: ou are concerned about one of the assets in your fully diversified portfolio.  You just have an…

A: Portfolio diversification is risk mitigation strategy in which we invest in wide variety of the…

Q: A firm is considering Projects S and L, whose cash flows are shown below. These projects are…

A: Net present value and internal rate of return are the modern methods of capital budgeting that are…

Q: shareholders

A: NPV or net present value is one of the capital budgeting methods that are calculated to decide on…

Q: .(True or False) Risk shifting refers to a situation in which management of a firm with risky debt…

A: Risk Risk The chance of loss in an investment or the uncertainties involved in an investment is…

Q: Why does the Limitation of Portfolio analysis is It suggests the use of standard strategies that can…

A: The combination of investments undertaken to minimize the risk and maximize the return is called…

Q: Which of the following is not a financing decision?   A   Should the firm borrow money from a…

A: Financing decisions- It is concerned with the quantum of funds to be raised from the various…

Q: Why does Portfolio analysis limitation is it  suggests the use of standard strategies that can miss…

A: Portfolios analysis is the method through which the corporations view their business units and…

Q: Suppose profits earned by one firm are independent of profits earned by other firms. When managers…

A: Individuals, organizations, or entities that possess equity or shares in a corporation are known as…

Q: The stakeholder capitalism model:   typically avoids the flaw of impatient capital. tries to meet…

A: The finance model means s the theoretical and practical framework used to understand the behavior of…

Q: The stockholders’ claim in a levered firm can beviewed as a call option; stockholders have the…

A: Stockholder: An individual or group holding the equity stock of the company is called the…

Q: A rights offering

A: The correct answer is d. gives the firm a built-in market for new securities.

Q: Explain the following statement: “The stand-alone risk of anindividual corporate project may be…

A: Answer: When we look into the individual corporate project’s standalone risk, we can talk only about…

Q: What method would be the least risky to raise capital if it has a less-than-favorable credit rating?

A: K Corporation is trying to raise capital. Capital is needed by any company for growth purpose. So K…

Q: Which of the following are negative consequences of compensating managers with stock?   Question…

A: Providing managers with stock as a form of compensation might in fact have unfavorable outcomes,…

Q: Which of the follwong is a true statement about Risk Capital or Owner's Equity? There is no legal…

A: Onwer's equity is sometimes known as risk capital because the equity owner's will get the dividends…

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: In theory, should a firm be equally concerned with stand-alone,corporate, and market risk? Would…

A: Introduction: Risk can be characterised in terms of the uncertainty of future consequences resulting…

Q: A high level of financial leverage exposes firms to default risk. However, as a result of it,…

A: Financial leverage is related to the capital structure of company and it is very important for the…

Q: All the above problems are avoided if the company follows the Pecking Order Theory of capital…

A: Pecking Order Theory : It states that the financial manager of the company who takes financing…

Q: Which of the following statements is least accurate? A. The variance on a well-diversified portfolio…

A: The dividend is distribution of profits to the shareholders of company and dividend is taxable in…

Q: Firms facing hostile takeovers often take actions to forestall the acquisition. For instance, a…

A: Hostile takeovers refer to those acquisitions and takeovers in which the management of the company…

Q: Define the terms aggressive and conservative whenapplied to financing, give examples of each, and…

A: Financing of working capital means what portion of WC is financed through long term borrowings and…

Q: ccording to the risk shifting (or asset substitution) hypothesis O Shareholders are keen to take…

A: Introduction : Risk shifting occurs when stockholders accept overly hazardous ventures with the…

Q: Consider the following statements about a firm: I. The debt beta of a firm is usually quite low. If…

A: Weighted Average Cost of Capital is referred to as the common method for determining the required…

Q: If managers of a company have inside information about the company’s future performances and such…

A: Insider trading refers to having inside information of a firm that is not known to the general…

Q: It is generally argued that the takeover constraint : Deters management from engaging in…

A: Takeover Constraint:-It is a risk of being taken over by another company, hence the company's…

Q: what is meant by the value of a potential takeover target as an independent firm ? when can a…

A: A potential takeover target's intrinsic or standalone value is what matters when evaluating a…

Q: 2. Which of the following is false about the under-investment problem? The under-investment problem…

A: Under investment is an agency problem when the amount of debt in the company's capital structure is…