Market condition affecting cost of capital, Financial Management

Assignment Help:

Q. Market condition Affecting cost of capital?

Market condition: if an investor is purchasing a security where the risk of the investment in significant the opportunity for addition return is necessary to make the Investment attractive. Essentially as the risk increase, the investor requires a higher rate of return require. This increase is called risk premium. if investor is increase their require rate of return this will be simulate cause a higher cost of the capital. If the security is not readily rate of return this will simultaneously cause a higher cost of the capital. If the security is not readily marketable when the investors wants to sell or even if a continuous demand for the security is not readily marketable when the investor wants to sell and even a continuous demand for the security exists but the price significant an investor will require a relatively high rate of the return. On the other hands if a security readily marketable and the price of the security is reasonable stable, the investor will have a lower require rate of the return and they company, s cost of capital will be lower.


Related Discussions:- Market condition affecting cost of capital

MM., What are the assumptions of MM(Modigliani Miller) approach?

What are the assumptions of MM(Modigliani Miller) approach?

Contents of the offering memorandum, Contents of the Offering Memorandum ...

Contents of the Offering Memorandum Executive Summary: It constitutes one of the most important parts of the document and is the key selling chapter of the document. It should

Rectification of errors, What is rectification of errors? List and explain ...

What is rectification of errors? List and explain the stages where the errors are deducted for rectification.

364-day t-bills, 364-Day T-Bills The Government considered that it is i...

364-Day T-Bills The Government considered that it is important to develop government securities market for monetary control. It also had an intention to ensure that government'

What do you mean by cash flow ratios, Q. What do you mean by Cash Flow Rati...

Q. What do you mean by Cash Flow Ratios? Cash Flow Ratios: - Cash Flow Ratios are an additional device of cash management. Some important cash flow ratios are: (i) Cash Turn

Organization and management pattern of uti, Organization and Management Pat...

Organization and Management Pattern of UTI UTI has a full-time Chairman with an Executive Trustee reporting to him. The Executive Trustee looks after the Corporate Office, Zona

Cash flow estimation and risk ananlysis.., as a financial analyst, you must...

as a financial analyst, you must evaluate a proposed project to produce printer ink. the equipment would cost 60000 plus 10000 for installation. annual sales would be 5000 units at

Case let, Which type of financing is appropriate to each firm

Which type of financing is appropriate to each firm

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd