In order to find out cost of equity capital under CAPM which of the following is. B Since debt financing is cheaper than equity financing raising a companys debt ratio will always reducet the companys WACC.
Pdf Multiple Choice Questions Chapter 1 Introducing The Firm And Its Goal Mithlesh Prasad Academia Edu
If a firm finds that the cost of debt financing is currently less than the cost of equity financing an increase in its debt ratio will always reduce its cost of capital.
. The hedging approach to financing involves matching maturities of debt with specific financing needs. Client relies heavily on debt financing especially by financing permanent assets with short-term loans. Item Company A Proxy Company Equity Beta β e 12 14 Value of Equity 1500 1300 Value of Debt 300 600 The risk free rate is 4.
Debt financing the sale of bondsb. B Statement 1 is correct while Statement 2 is incorrect. Capital structure is highly relevant to the value of a firm.
A debt factor a size factor and a book-to-market factor. Which of the following statements regarding the debt servicing capacity of a company is INCORRECT. Statements a and b are correct.
3 Capital structure theory allows managers to precisely determine the optimal capital structure for any for-profit business. Correct Feedback correct Incorrect Feedback incorrect Add Question Here Question 2 Multiple Choice Question MM Proposition I is the theory that the. Question 3c of 10 2 Debt financing 226743 Maximum Attempts.
Long-term debt can be categorised as financing with an initial maturity. 2 In all situations the use of debt financing increases the riskiness to owners. Usually exhibit greater stability than earnings.
2 High debt funds increases the operating or business risk. There is a need of collateral security for debt financing. Which of the following is an incorrect statement regarding debt financing 2 points Bond holders Debenture holders do not have voting.
Which of the following is an incorrect statement. Statements a and b are correct. The average return on the market is 12.
Equity financing provides necessary capital more quickly than a loan. Issuance of common stocks to raise funds for working capital d. Which of the following is incorrect.
In most situations the use of debt financing increases the return to owners say as measured by ROE. The number-one goal of any business is long-term profits. The amount you pay in interest is tax deductible.
Detection risk cannot be changed at the auditors discretion. Which of the following are the factors for the Fama-French model. Which of the following statements about the use of debt financing financial leverage is incorrect.
All of the above. The owners equity is. A Both Statement 1 and Statement 2 are correct.
Which of the following statement is incorrect. The number-one goal of any business is tocontribute to society. Five years ago an owner purchased a parcel of property for 200000 and financed the purchase with a 150000 6 conventional loan.
Which of the following statements best describes a fully amortised term loan. Today the value of the property is estimated at 239000 and the loan balance is 146000. The original partners can maintain total control of the company.
Cost of equity capital varies in response to changes in a firms capital structure. All other things equal reducing a firms current assets will decrease profitability as measured by ROI. Without profits other contributions are impossible.
Fluctuate more widely than earnings. The debt to gross cash flow ratio indicates years required for cash flows to repay total debt. The debt to gross cash flow ratio is an indicator of debt servicing capacity.
The use of short-term debt to finance non-current assets 5. The following details are relevant. In general long-term debt costs less than short-term debt.
A Time Value of Moneyb Rate of Interestc Tax-deductibility of Interestd Dividends not Payable to lenders. The use of long-term debt to finance current assets. The executive in charge of the finance department is the companys.
Equity financing the sale of stock. Which of the following statements is incorrect concerning private placements A from FINANCE 474 at University of Windsor. Up to 24 cash back Debt Financing is a cheaper source of finance because of.
In all situations the use of debt financing increases the riskiness to owners. 1 High debt funds in capital structure increases EPS. The WACC measures the marginal after-tax cost of capital.
A Since debt financing raises the firms financial risk raising a companys debt ratio will always increase the companys WACC. Answer the following statement true T or false F introduction-to-business. Statements b and c are correct.
The WACC is a measure of the before-tax cost of capital. Which of the following is not one of the three. The hedging approach to financing involves e matching maturities of debt with specific financing needs.
Typically the after-tax cost of debt financing exceeds the after-tax cost of equity financing. Answer cost of equity capital has a positive linear relationship with a firms capital structure. The excess market return a size factor and a debt.
Chapter 1 - Question 6. If a company wishes to finance a printing press with a five-year life it would be advisable to finance it with. Multiple Choice Maximum Score.
Over 180 days and less than a year. Shareholder ownership gets affected with debt financing. Select the correct answer from the options given below.
The excess market return a debt factor and a book-to-market factor. In the real world we find that dividends a. Which of the following statements is most correct.
Which of the following is an advantage of equity financing over debt financing. In most situations the use of debt financing increases the return to owners say as measured by ROE. Answer The excess market return a size factor and a book-to-market factor.
Mockboard 2011 Toa
Doc 99809f6e 777c 483b 9ea0 9b65e3d51d29 Tb13 Linh Lina Academia Edu
Pin By Venture Concept Group On Taxes Bookkeeping Business Small Business Finance Small Business Organization
0 Comments