Debt financing is typically less expensi

Q: The line between debt and equity is hard to draw. What does this means?

A: Debt and equity are the two sources from where the company raises finance according to the need.…

Q: If short-term interest rates are lower than long-term rates, why might a borrower stillchoose to…

A: Short term interest rate refers to the rates that are charged on a short-term loan or debt amounts.…

Q: Equity financing is the borrowed funds from outside sources like loans, bonds and mortgages. True or…

A: Corporate finance is referred as the decision of the firm to take capital investments and other…

Q: Why do noninvestment-grade bonds have much higher direct costs than investment-grade issues?

A: Bond: Bond is a kind of debt instrument typically issued by corporations, government organizations…

Q: Compare the advantages and disadvantages of debt andequity financing, and explain the two major…

A: Debt Financing: Debt financing refers to borrowing money from outside to meet the capital…

Q: A note of caution in interpreting the debt ratio is that ____________ (a)      all debt decreases…

A: debt ratio is the ratio of total debt to total assets.

Q: hich of the following statements regarding the private debt market is FALSE? A) Private debt has…

A: The private debt market is the market in which owned by the owners, households and businessman. Bank…

Q: What are advantages of debt financing?

A: The advantage of debt financing: Ownership remains with the person itself as when the person agrees…

Q: Debt will always have a cost basis. that is less than equity. OA. True OB. False

A: Debt - Debt is referred to as the amount of money that is borrowed by one party from another and is…

Q: How can swaps be used to reduce the risks associated with debt contracts?

A: Swap is a financial contract through which two parties exchange the cash flows associated with their…

Q: Negative debt always carries a high interest rate and high fees. True or false

A: Interest rate refers to the price paid to borrow money. Negative interest rates mean that cash…

Q: Most lenders do not require collateral for short-term financing.; True or False

A: Collateral refers to something that is pledged in order to repay a loan and which can be forfeited…

Q: Many types of debt including auto loans, student loans and credit debt are securitized. The…

A: Securitization is the procedure where an issuer designs a marketable financial instruments by…

Q: The use of warrants lowers the coupon rate on the correspondingdebt issue. Does this mean that the…

A: The bond is the debt issue where a bondholder is guaranteed with annual coupon payment against the…

Q: Explain an example of debt investment.

A: Debt Investment Debt Investment is refer as when the company raises the money by selling the debt…

Q: What are the differences and similarities between debt financing and equity financing?

A: Similarity between debt and equity finance. 1 Both bonds and equity are traded in market. 2 Prices…

Q: Which of the following situations are likely to result in higher loan defaults?     Mortgages…

A: Loan default implies that borrower is not able to repay debt according to initial predetermined…

Q: Describe the advantages of different methods of short-term debt financing.

A: Short Term Debt is also referred to as current liabilities.These are the financial obligations of…

Q: When selling bonds at a premium, the premium received effectively a.does not affect the cost of…

A: Premium means selling of bond at price higher than face value.

Q: What is a limitation common to both the current and quick ratio? *       Debtors may not pay on…

A: CURRENT RATIO: current ratio = current assetcurrent liabilities QUICK RATIO: quick ratio = current…

Q: Student loans are an example of Non-FICO debt Unsecured debt FICO debt Secured debt

A: Loan is a value which a person borrowed from the other sources like banks and this amount is repaid…

Q: ‘Debt finance is less expensive than equity finance’ Explain

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: When is debt financing more attractive than equity financing?

A: Debt refers to the amount borrowed by one party from another party, This arrangement of borrowing…

Q: Applications to acquire informal debt financing usually have lower standards or criteria but will…

A: Informal debt financing usually is small in nature besides being unsecured and having short term…

Q: In the aggregate, debt offerings are much more common than equity offerings and typically much…

A: Debt : In simple words, debt refers to the securities such as bonds in which the holder gets the…

Q: What are the potential problems or limitations of using methods, to estimate the cost of debt, that…

A: The cost of debt is the rate that is paid by a corporation on its debt. The debt may include bonds,…

Q: All things considered stable cash flows enable higher debt borrowing.

A: Cashflows: These are movement of the money from various sources like operations, investment…

Q: Why does the use of debt lower ROA?

A: Introduction: Debt can be characterised as an amount or sum owned by a person to another for…

Q: State the disadvantages of long-term debt financing.

A: Long term debt refers to the debt that has a maturity period of more than 1 year.They are also…

Q: Is equity valuation or bond valuation more difficult to determine and why?

A: In case of a bond, the cash flows are its coupon payments and the redemption worth. These are…

Q: The use of warrants lowers the coupon rate on the corresponding debt issue. Doesthis mean that the…

A: Yes, Component kd for debt plus warrant package is less than straight bonds.

Q: What do we call the cost that a borrower must payto use debt capital?

A: Debt capital is the capital that is borrowed from various financial institutions or other lenders…

Q: Is Collateralized debt obligation a good investment? Please explain in details.

A: A collateralized debt obligation also known as a CDO is a complex structured credit product which is…

Q: Long-term debt financing can have a possibility of more funding but is more risky in terms of…

A: Long-term debt financing is the way of funding in which the institution lends long-term debt to the…

Q: Describe the disadvantages of different methods of short-term debt financing.

A: Short term debt financing are also referred to as current liabilities.These are the financial…

Q: What are spontaneous sources of short-term financing and unsecured sources of short-term loans

A: The source of funds which are having a zero cost is termed as a spontaneous source of funds. It is…

Q: What are some advantages and disadvantages of short-term versuslong-term debt?

A: Debt is an amount which is borrowed by the firm. When the maturity of debt is up to one year, it is…

Q: Explain Negative Amortization Loans with example?

A: Amortization is a way to spread regular payment over time. There is a fixed rate which is paid as…

Q: When the default risk is high, ___. the debtor charges high interest the debtor earns more the…

A: Default risk is the risk faced by an investor or lender that the borrower becomes unable to pay the…

Q: a) Falco Inc. is considering a debt issue and is trying to determine the appropriate amount to…

A: Optimal capital structure is a mix of debt and equity which would maximize the value of the company.

Q: An advantage of bonds is O Bonds do not affect owner control O Bonds require payment of par value at…

A: Bonds are the debt instruments that are being used by the entities for the purpose of raising its…

Q: From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term…

A: The company can increase it capital by issuing the share, bonds, debentures, etc., These are called…