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What action(s) should be taken if analysis of pro forma financial statements reveals positive trends? Negative trends? When examine the pro forma statements, managers habi
When a manager measures the interest rate exposure, he would be interested in analyzing the exposure to a set of changing interest rate. The process of r
The exchange rate uncertainty may not essentially mean that firms face exchange risk exposure. Describe why this may be the case. Answer: A firm can comprise a natural hedging p
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Capital structure theory: Use the following information to answer the questions: Case I: Capital structure theory ( no tax ) Case II: Capital struct
Explain the difference among the discounted free cash flow model as it is applied to the valuation of common equity and as it is applied to the valuation of whole businesses. The
The ability of a firm to satisfy its debt obligations can be assessed using three sets of ratios: Short-term solvency ratios Capitalization
Crown Co. is expecting to receive 100,000 British pounds in one year. Crown expects the spot rate of British pound to be $1.49 in a year, so it decides to avoid exchange rate risk
Extendible reset bonds are floaters in which the issuer is required to reset the coupon rate so that the issue will trade at a predetermined price (usually above
Liquidity risk tends to change as and when there exists a change in the spread between the bid and the ask price. Market liquidity change is a matter of concern f
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