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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- The cost of capital is affected by some factors that are under the firm’s control and some that are not. What are the factors the firm can and cannot control and what will be the impact of these factors on companies average cost of capital (WACC)? What factors determine the beta of a stock? Define and describe each.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?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.Indicate whether its TRUE or FALSE. Then provide a complete explanation! Financial risk is reflected in the variability in the returns a company may generate on its assets and is mainly driven by the risks inherent in the industry that the company operates in. Introducing leverage into a firm’s capital structure may increase the expected returns for shareholders but the impact on share price may still be uncertain.
- Discuss Mark 10:23-25 and its application to capital rationing and maximizing shareholder wealth. Capital rationing could affect the returns to shareholders. An ethical dilemma is faced by the executives of the business. Capital rationing could affect the stakeholders (other than the shareholder) of the business. Should capital constraints modify the principle of maximizing shareholder wealth?The dividend policy of a company is a key focus for potential investors. This is because dividends are the main contribution to the assumed investment objective. Hence, it is important that management monitor and review the various factors that influence the company's dividend policy. Critically analyse this statement.If the financial markets are competitive and complete, which ones of the following goals of a firm are equivalent? I. Earnings maximization II. Earnings per share maximization III. Share value maximization IV. Maximizing the utility of existing shareholders I and II Il and III II, II and IV IIlI and IV
- Question 3 a) Explain what is meant by earnings management. b) Why is corporate governance important for evaluating corporate earnings management? c) What assumptions about market efficiency are typically adopted in capital markets research? What do we mean by market efficiency?Financial risk is: Multiple Choice irrelevant to the value of a company. inversely related to the cost of equity. a type of unsystematic risk. the risk inherent in a company’s operations. dependent upon a company’s capital structure.3) Which three of the following factors are most likely to lead to a stable dividend policy? A) Clientele preferencesB) Dividends as a residual; the availability of positive NPV projectsC) Mechanisms highlighted by agency theoryD) Signalling
