In financing their operations, corporations have the options of raising capital by issuing stock or debt or both. What are the benefits of using the two sources and what are the risks with each of them?

Q: Why might a large corporation want to raise long-term capital through a borrowing money from…

A: Raising money from financial institutions increases the likelihood of finding investors who share…

Q: In case of a corporation, if the share holders want the dividend payout ratio to increase and…

A: The corporation is regulating through two parties, one with the internal affairs and other with the…

Q: Explain how a firm's stock and trade debtors management problems can be linked to a capital…

A: Capital budgeting is the procedure by which a firm decides whether the investment should be made in…

Q: All of the following are sustainable methods businesses can use to raise capital (funding) except…

A: Answer:   Option 4

Q: It has been suggested that in a world with only corporate taxation the value of the firm = the value…

A: Capital structure of a firm signifies the mix of equity and debt used for financing the business.…

Q: What are the risks and rewards of investing in the stock market as compared to the bond market? b.…

A: Because you have posted multiple questions, we will answer only the first question and for the…

Q: All of the following are sustainable methods businesses can use to raise capital (funding) except…

A: Money is an important source of finance for the business. It can be arranged from various sources…

Q: Describe some ways other than an IPO thatcompanies can use to raise funds from the capitalmarkets.

A: Additional than initial public offering a corporation might issue stock with the assistance of…

Q: How do bonds provide financing to corporations for their capital projects? What are the key…

A: A bond is a good source of finance. Payment of coupon at a regular interval help in tax savings.

Q: Explain in detail why corporations engage in capital budgeting, present the pros and cons of the…

A: Capital budgeting is a way to evaluate a decision based on some evidences and it helps an investor…

Q: Why are the costs of selling equity for a corporation so much larger than the costs of selling debt?

A: Introduction Debt and Equity are part of the capital structure of a company. The cost of equity is…

Q: it typically has a higher cost of capital than equity. it carries voting rights.

A: Debt financing occurs when a company raises capital by selling debt instruments to investors. The…

Q: Which is false about long-term sources of a firm’s capital? a. Preferred shares are securities…

A: Solution:- Long term sources of capital are those sources of funds from where the funds are acquired…

Q: Why do public utility companies usually have capital structures that aredifferent from those of…

A: Capital structure is the combination of short and long term debt as well as equity and preference…

Q: Having researched derivatives for investment portfolios, is there a need for them as hedging…

A: Derivatives as hedging vehicles: Derivatives are nothing but the financial instruments in which two…

Q: What impact does the inability to issue common stock have on a not-for-profit business's capital…

A: We have to discuss the effect of the inability to issue common stock on Capital Structure and…

Q: Which of the following statements describes the cost of capital?…

A: Cost of Capital refers to that rate of return that a firm expects to earn from its investments for…

Q: One of the fundamental questions of corporate finance is how a firm should leverage its capital…

A: The capital structure of a firm relates to the exact proportion of the debt and the equity utilized…

Q: Which of the following statements best describes how a corporation determines its cost of capital?…

A: Cost of Capital is the rate of return the firm expects to earn from its investment in order to…

Q: The idea of determining the WACC is to identify the relevant cost of utilizing funds provided by…

A: WACC is an abbreviation for weighted average cost of capital. WACC is computed to evaluate various…

Q: When valuing private companies, we use public companies as comparables to gain insights into how the…

A: Valuation of private companies is not easy simply because of the fact that limited information are…

Q: What are the basic arguments for increasing capital requirements at large commercial banks? In what…

A: The primary argument is that the risk is lesser if the bank increases its capital. In other words…

Q: Analyze why, despite employing various investment appraisal techniques, large investment projects in…

A: Capital project is the project which helps in improving and maintaining the asset, often known as…

Q: What are the sources of short-term funding available to large corporations? Differentiate these…

A: Funding is the way through which an organization raises funds for its financial requirements and…

Q: What is the important question of corporate finance when a finance manager advises the company’s…

A: Hi, since you have asked two different question. We will answer the first one as per the authoring…

Q: Critically discuss the effect of increasing the amount paid upfront when corporations make capital…

A: Capital purchases refer to the expenses a company makes for buying new equipments, improving long…

Q: Are synthetic CDOs a legitimate business investment, or are they pure gambling? If the former, what…

A: Workplace ethics is concerned with how employees act in the workplace, as well as their morals and…

Q: the effects of increasing the amount paid upfront when corporations make capital purchases with a…

A: Capital expenditure is an expense, that generates profits for a longer period of time which can be…

Q: hich of the following statements best describes how a corporation determines its cost of capital?…

A: A capital structure of a firm is a mix of debt and equity used for financing its long term…

Q: How does attracting equity capital easier for a corporation?

A: Equity Capital Financing: It is a process of raising finances or capital by selling shares. When…

Q: Which is false about long-term sources of a firm's capital? * , O All types of corporations may…

A: Long-term sources in accounting: The term 'Long-term' indicates the time span of more than one year.…

Q: When a corporation invests borrowed money in assets that generate profits greater than the after-tax…

A: Debts are considered a financial instrument used to raise finance for the organization. It is also…

Q: Evaluate whether using the cash raised by the rights issue to buy back bonds is likely to be…

A: The answer for the question on using the cash raised by the rights issue to buy back bonds is…

Q: Is there a type of stock preferable over the other? Should a corporation also utilize borrowing if…

A: Equity Stock represents the equity shares of a company. Equity shares are the part of company owned…

Q: Which of the following scenarios does a donated capital arise? * Forgiveness of an existing loan…

A: Donated Capital. It arises when someone is giving assets, securities or treasury stocks. shares…

Q: As a micro-enterprise, which sets of financing are the most likely to be used? * A. Banks and…

A: 'Micro-enterprise' is a term that is used to refer to a small business which employ less than 9…

Q: Your corporation needs additional capital to fund an expansion. Discuss the advantages and…

A: The answer is as fallows

Q: It has been suggested that in a world with only corporate taxation the value of the firm = the value…

A: Capital structure of a firm signifies the mix of equity and debt for financing. According to the…

Q: What is the PRIMARY way a corporation can raise money through EQUITY financing?

A: Equity financing is referred as the fund raising for a company by selling its shares. The person who…

Q: Which one of the following statements is TRUE?   a. Creditors have a claim on a firm's earning…

A: Charter is a legal document that contain details of the governance, structure, objectives and other…

Q: Why do companies use so many different types ofinstruments to raise capital? Why not just use…

A: Finance is the life-blood of every organization. Every organization needs finance for its day-to-day…