a.
To discuss: The statement that is classified under true or false.
a.
Answer to Problem 1QP
The statement is classified as “True”.
Explanation of Solution
The statement that is classified under true is as follows:
A zero-sum game is a term to depict a circumstance where the increase of one player is balanced by the loss of another player, expressing the total of zero
Therefore, the given statement is classified as “True”.
b.
To discuss: The statement that is classified under true or false.
b.
Answer to Problem 1QP
The statement is classified as “False”.
Explanation of Solution
The reasons supporting the statement to be false are as follows:
By reducing the risk there are no chances of increasing the value of the firm.
Therefore, the given statement is classified as “False”.
c.
To discuss: The statement that is classified under true or false.
c.
Answer to Problem 1QP
The statement is classified as “True”.
Explanation of Solution
The reasons supporting the statement to be true are as follows:
It is likewise indicated that hedging lessens likelihood of money related issues through decreasing the tax payments.
Therefore, the given statement is classified as “True”.
d.
To discuss: The statement that is classified under true or false.
d.
Answer to Problem 1QP
The statement is classified as “True”.
Explanation of Solution
The reasons supporting the statement to be true are as follows:
The investors in mutual funds may end up paying for index like returns that could be acquired for lower expenses or wind up paying for returns that reflect short-term volatility as opposed to supervisor ability.
Therefore, the given statement is classified as “True”.
e.
To discuss: The statement that is classified under true or false.
e.
Answer to Problem 1QP
The statement is classified as “True”.
Explanation of Solution
The reasons supporting the statement to be true are as follows:
By figuring an integrated strategy that joins the creation and exercise of real options along with other risk management strategies, the board can lessen risk and in this way increment firm’s worth.
Therefore, the given statement is classified as “True”.
f.
To discuss: The statement that is classified under true or false.
f.
Answer to Problem 1QP
The statement is classified as “False”.
Explanation of Solution
The reasons supporting the statement to be false are as follows:
Therefore, the given statement is classified as “False”.
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Chapter 24 Solutions
Fundamentals of Corporate Finance
- A firm needs to raise $950,000 but will incur flotation costs of 5%. How much will it pay in flotation costs? Multiple choice question. $55,500 $50,000 $47,500 $55,000arrow_forwardWhile determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. pure play approach economic value added method subjective approach security market line approacharrow_forwardWhen a company's interest payment Blank______, the company's tax bill Blank______. Multiple choice question. stays the same; increases decreases; decreases increases; decreases increases; increasesarrow_forward
- For the calculation of equity weights, the Blank______ value is used. Multiple choice question. historical average book marketarrow_forwardA firm needs to raise $950,000 but will incur flotation costs of 5%. How much will it pay in flotation costs? Multiple choice question. $50,000 $55,000 $55,500 $47,500arrow_forwardQuestion Mode Multiple Choice Question The issuance costs of new securities are referred to as Blank______ costs. Multiple choice question. exorbitant flotation sunk reparationarrow_forward
- What will happen to a company's tax bill if interest expense is deducted? Multiple choice question. The company's tax bill will increase. The company's tax bill will decrease. The company's tax bill will not be affected. The company's tax bill for the next year will be affected.arrow_forwardThe total market value of a firm is calculated as Blank______. Multiple choice question. the number of shares times the average price the number of shares times the future price the number of shares times the share price the number of shares times the issue pricearrow_forwardAccording the to the Blank______ approach for project evaluation, all proposed projects are placed into several risk categories. Multiple choice question. pure play divisional WACC subjectivearrow_forward
- To invest in a project, a company needs $50 million. Given its flotation costs of 7%, how much does the company need to raise? Multiple choice question. $53.76 million $46.50 million $50.00 million $53.50 millionarrow_forwardWhile determining the appropriate discount rate, if a firm uses a weighted average cost of capital that is unique to a particular project, it is using the Blank______. Multiple choice question. economic value added method pure play approach subjective approach security market line approacharrow_forwardWhat are flotation costs? Multiple choice question. They are the costs incurred to issue new securities in the market. They are the costs incurred to insure the payment due to bondholders. They are the costs incurred to meet day to day expenses. They are the costs incurred to keep a project in the business.arrow_forward
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