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Different Risk-profile - Shareholders and Management
Shareholders will generally prefer high-risk-high return investments while they are diversified that is they have many investments and the collapse of one firm may have irrelevant effects upon their overall wealth.
Managers on the other hand, will prefer low risk-low return investment because they have a personal fear of losing their jobs whether the projects collapse. Like human capital is not diversifiable. This dissimilarity in risk profile is a cause of conflict of interest while shareholders will forego some profits whenever low-return projects are undertaken.
Stewardship Accounting Shareholders contribute capital that is provided to the directors that they employ and at the end of each accounting year render an explanation on the a
Sources of Funds - Finance Venture capital, with combining risk financing along with marketing assistance and management, could become an effective instrument in fostering dev
Discuss the necessity of risk adjusted hurdle rates for companies with diverse lines of business. Every company invests in new projects based on the expectation of earnings
For each of the financial statement ratios listed below calculate the ratio for the current year and for the prior year. (Note that in most textbooks, some of the ratios call for a
DEFINE THE TERM OPTION IN DETAIL?
What are the principles of multiunit finance?
Example of Asset Based Valuation Extracted information from the books of Kent Limited. Current liabilities Bank overdraft Sh. 300,000
You buy a SML Bond for $980. The bond has a face value of $1000 and an yearly coupon rate of 8%. There are five years left until maturity. a. What is the yield to maturity on
Government Budget Deficit If the Government spends much more than it gets in from tax revenue, it runs a budget deficit. This deficit should be covered or financed either via
a bond that has a 1000 per value and a contract or coupon interest rate of 12.8%. The bond is selling for a price of $1125 and will mature in 10 years. The firm''s tax rate is 34%
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