Describe the behavior of stocks

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1. What is β and why is it important to investors and issuers of stock? Describe the behavior of stocks with βs of greater than one, less than one, and less than zero.

2. A company has 100 million shares outstanding trading for $8 per share. It also has $900 million in outstanding debt. If its equity cost of capital is 15%, and its debt cost of capital is 12%, and its effective corporate tax rate is 40%, what is its weighted average cost of capital? (Show workings)

3. What is the difference between capital structure and capital budgeting? Explain and give an example of a capital structure decision and an example of a capital budgeting decision.

4. What is the Cash Conversion Cycle (CCC)? Name the components of the CCC and explain why the CCC is important to business.

Reference no: EM131251353

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