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Problem:
(a) Companies A and B differ only in their capital structure. A is financed by 30 percent debt and 70 percent equity; B is financed 10 percent debt and 90 percent equity. The debt of both companies is risk-free.
(i) Rosencrantz owns 1 percent of the common stock of A. What other investment package would produce identical cash flows for Rosencrantz?
(ii) Guildenstern owns 2 percent of the common stock of B. What other investment package would produce identical cash flows for Guildenstern?
(iii) Show that neither Rosencrantz nor Guildenstern would invest in the common stock of B if the total value of company A were less than that of B.
(b) "Modigliani and Miller totally ignore the fact that as you borrow more, you have to pay higher rates of interest." Explain carefully whether this is a valid objection.
Select an organization and discuss what type of information should be protected in a BIA plan. How would you ensure protection of the confidentiality of such information and preven
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Why are many economists opposed to licensure of medical facilities and personnel?
An underwriter guarantees to increase a fixed amount of capital through an initial public offering (IPO).
which product we choose
Problem 1: (a) Define the concepts of production-oriented capitalist system and market-oriented capitalist systems. (b) With set examples, explain how these firms behave
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Pick a corporation. Create the same return column for the same 60 months for this corporation. For this 60-month period what is the correlation coefficient between the monthly ret
Are international capital flows a problem? Problem: Capital flows can have an adverse outcome onto: a. Balance of payments (BoP): Shortly term capital inflows can be like:
theory of profit maximisation
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