Choose the best answer Between equity and debt capital a.Equity is riskier than debt b.Debt is safer than equity c.Both debt and equity are equally risky d.No option is correct
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Between equity and debt capital
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- Between equity and debt capital a. Debt is safer than equity b. Equity is riskier than debt c. Both debt and equity are equally risky d. No option is correctBetween equity and debt capital a.Both debt and equity are equally risky b.Equity is riskier than debt c.No option is correct d.Debt is safer than equityWhat is the biggest disadvantage to be considered when exploring the option of equity financing versus debt financing?
- Equity is ________________ (more/less) risky than debt since equity holders receive a ________________?It is more provident that equity financing is more favored because of the ultimate risks associated within the cost of accumulating debt in terms of paying principal plus interest. Group of answer choices True False“Even in an efficient market, it is still valid to seek out a ‘favourable’ rate of returnfrom an equity investment. In an efficient market, one security is as good as any other.”Do you agree with this statement? Discuss your point of view.
- A. Briefly explain the problem of moral hazard in: (i) Equity financing (ii) Debt financingB. What is the adverse selection problem in financial markets and how can it be solved?Choose option a,b,c,d,e for the following: Question 6 - A higher financial risk: a. Arises when the debt – equity ratio is reduced. b. Can avert financial distress. c. Will cause the shareholders to expect lesser return. d. Indicates an inefficient use of fixed cost assets. e. Indicates an inefficient use of fixed cost funds.When would individual equity securities be a better choice over ETFs for a risk adverse investor? Explain your reasoning in full and provide justification for your decision-making.
- When would individual equity securities be a better choice over ETFs for a risk adverse investor? Explain your reasoning in full and provide justification for your decision-making using criteria learned in the moduleWhich of the following is TRUE about liquidity? a. All assets should be put in liquid asset so that it is easy to use when necessary b. In most of the cases, the more liquid asset provides the lower return c. Investors should not care about liquidity in order to have a balanced portfolio investment d. Liquidity requirement does not have any impact on the return.The capital asset pricing model expresses the cost of equity as a function of a return on riskless assets, a market premium, and: Select one:a. Unsystematic risk.b. None of these.c. The cost of debt.d. Systematic risk.