Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
1. Weights used in calculating the WACC should: sum to 1.00. always include Wd. be based on the book value of each source of financing. be calculated according to the price of each security-so if the price of a bond is $1,000, and the price of common stock is $50, then the weight of debt would be .20. Question 2. 2. One reason why we are not concerned with idiosyncratic risk (also called firm-specific risk) is that: most risk is not firm-specific, so we can ignore it. through hedging and insurance, investors may now invest in stocks with almost no risk exposure of any kind. it is easy and almost costless to diversify one's portfolio and eliminate idiosyncratic risk. investing in bonds can offset the idiosyncratic risks of shares of stock. Question 3. 3. The weighted average cost of capital is: the average return for the company's stock over the past several years. the average cost, including commissions, for raising capital for the firm. an average required return for each of the sources of capital used by the firm to finance its projects, weighted by the amount contributed by each source. interest payments and dividends, divided by the price of bonds and stock, respectively. Question 4. 4. Which of the following statements regarding the cost of debt is true? The cost of debt for bonds equals the coupon rate of outstanding bonds. The cost of debt for bonds is found by dividing the price by the annual coupon. The cost of debt for bonds is found by calculating their yield to maturity. The cost of debt equals the flotation costs charged by investment bankers who advise the firm. Question 5. 5. We assume investors are risk averse, and therefore they: are equally concerned with upside potential and downside risk. expect a higher return for bearing more risk. will pay more for an investment with higher risk. have very high required rates of return. Question 6. 6. Beta is estimated as the slope of a regression line fit to pairs of periodic returns, (rx, ry), where: rx is the return for a market index such as the S&P 500 Index. rx is the return for the stock being analyzed-for example, IBM's return if we are estimating IBM's beta. the slope measures the average return for the market portfolio for each percentage change in the value of the security of interest. ry is the return for the market index such as the S&P 500 Index. Question 7. 7. Which of the following statements regarding the cost of preferred stock is true? It is typically found by solving for an annuity's discount rate. It is typically found by solving for an annuity due's discount rate. It is found similarly to a perpetuity's discount rate but with irregular spacing of the dividends. It is typically found by solving for a perpetuity's discount rate. Question 8. 8. Investors will make an investment if: the historical rate of return exceeds the expected rate of return. the required rate of return exceeds the expected rate of return. the expected rate of return exceeds the actual rate of return. the expected rate of return exceeds the required rate of return. Question 9. 9. In order to find the cost of equity using the firm's cost of debt, the rule of thumb is to: multiply Kd by one plus the tax rate. multiply Kd by one minus the tax rate. add 3% to 6% to Kd. multiply Kd by the firm's beta. Question 10. 10. If a firm just paid a dividend equal to $4.00 a share, then for the WACC, in order to find the cost of equity, $4 should be: divided by the current price of the stock, and the quotient should be added to the dividend growth rate. divided by the current price of the stock. multiplied by one minus the tax rate, and the difference divided by the current price of the stock. multiplied by the sum of one plus the growth rate, and then divided by the current price of the stock; this quotient should be added to the dividend growth rate.
ltbrgtadams food service has issued 7 38 bonds that mature on july 15th 2042. the bonds are callable 1037.08 on july
What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs?
discuss the following topic should investors care about a multinational firms accounting exposure?accounting exposure
please answer the following four questions. important in order to receive full credit you need to answer the questions
biggardens ltd biggardens is a private company that owns and operates a chain of garden centres in the bristol area.
This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?
scenario questions ltbrgt ltbrgt ltbrgt?starting a new product or service line that will require new kinds of employees
What are the project's expected NPV and standard deviation of NPV?b. Should the base case analysis use the most likely NPV or expected NPV? Explain your answer.
Discuss primary financial statements published by a corporation, the various classifications used in a balance sheet-What is the purpose of a Balance Sheet? What information does it provide?
a.what is a ventures present value? does the past matter? what is meant by the statement if you are not using
negative growth stockswinton mining has seen its business slowly wind down. it recently paid a dividend of 1.80 per
What will the adjusted EPS and DPS be (rounded to the nearest cents)? And what would the stock price be (rounded to the nearest cent)?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd