Why do firms have different classes of stock? Multiple choice question. To increase the cost of capital To maintain control of the firm To improve operational efficiency Due to legal requirements
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Why do firms have different classes of stock?
To increase the cost of capital
To maintain control of the firm
To improve operational efficiency
Due to legal requirements
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- Based on the assumption efficient capital market is characterized by rationality and risk aversion, how does a company’s management select projects to maximize their owners (shareholders) wealth? please cite sourcesSubscribe Explain in detail what is a firm's Capital Structure? What is and how does a firm's Financial Policy impact its Capital Structure? Finally, what is opportunity costs and how does it affect a firm's Capital Structure?If a firm could maximize either its current market price or its intrinsic value, whatwould stockholders (as a group) want managers to do? Explain.
- 1. Based on the work of MM Propositions, why are levered firms usually more valuable than an otherwise identical unlevered firm?2. How does shareholder value relate to capital structure?How does a semi-strong market affect a company’s capital structure? Discuss the possible exposures and impact. Provide examples to justify your reasoning.Factors that affect the cost of capital equation Each of the following factors affects the weighted average cost of capital (WACC) equation. Which of the following factors are outside a firm’s control? Check all that apply. The general level of stock prices The effect of the tax rate on the cost of debt in the weighted average cost of capital equation The firm’s capital structure The impact of a firm’s cost of capital on managerial decisions Consider the following case: Acme Manufacturing Corporation has two divisions, L and H. Division L is the company’s low-risk division and would have a weighted average cost of capital of 8% if it was operated as an independent company. Division H is the company’s high-risk division and would have a weighted average cost of capital of 14% if it was operated as an independent company. Because the two divisions are the same size, the company has a composite weighted average cost of capital of 11%. Division L is…
- ТOPIC: Q1. Based on the work of MM Propositions, why are levered firms usually more valuable than an otherwise identical unlevered firm? Q2. How does shareholder value relate to capital structure?Which of the following actions should a manager take to optimize the firm's value? * Changing the capital structure if and only if the firm's value rises. Changing the capital structure if and only if the firm's value rises to the advantage of inside management Changing the capital structure if and only if the firm's value increases solely to the benefit of debtholders. Changing the capital structure if and only if the firm's value increases, even if it lowers stockholders' value. Changing the capital structure if and only if the firm's value grows and stockholder equity remains stable.Does capital structure influence the value of a firm? Why or why not?
- What does the empirical evidence say about capital structure theory? What are the implications for managers?How does a firm's dividend policy reflect its approach to financial decision-making, and what are the two primary strategies discussed in this context? A. Explain the concept of treating dividends as the residual part of a financing decision. B. Outline the key characteristics and principles of an active dividend policy strategy. C. Compare and contrast the implications of these two strategies on a firm's overall financial management. D. Provide examples illustrating situations where each strategy may be suitable for a firm. E. Assess the potential impact of a firm's dividend policy on investor perceptions and shareholder value. Choose the correct options (A, B, C, D, or E) to complete the statement, considering the various aspects of a firm's dividend policy and its significance in financial decision-making.How does a firm's dividend policy reflect its approach to financial decision-making, and what are the two primary strategies discussed in this context? A. Explain the concept of treating dividends as the residual part of a financing decision. B. Outline the key characteristics and principles of an active dividend policy strategy. C. Compare and contrast the implications of these two strategies on a firm's overall financial management. D. Provide examples illustrating situations where each strategy may be suitable for a firm. E. Assess the potential impact of a firm's dividend policy on investor perceptions and shareholder value. Choose the correct options (A, B, C, D, or E) to complete the statement, considering the various aspects of a firm's dividend policy and its significance in financial decision- making.
