Discuss the importance of financial restructuring, Corporate Finance

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Question :

(a) "Risk of diversified portfolio is much lower than the risk of less-diversified portfolio" - What is the relevance of this statement to corporate finance managers who are evaluating commercial projects?

(b) "There is no universal answer on the problem of impact of debt on value of the firm" - What are the benefit and cost of using debt in the capital structure?

(c) Why should one ignore capital structuring decision in evaluation project cash flows? Where do we consider capital structuring in project evaluation?

(d) "If markets are not efficient, financial managers would find it extremely difficult in taking rational decisions" - Do you agree to this statement? Why or why not?

(e) Discuss the importance of financial restructuring and asset restructuring in creating value.


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