What is the difference between firm-commitment and stand-by underwriting? What is underwriting spread?

Q: Why might there be two different component costs for common equity? Which oneis generally relevant,…

A: The raising of capital by issuing shares to the shareholders is called common equity. It can also be…

Q: What is meant by a dilutive security?

A: Dilutive security is a type of investment security that helps the company increase its equity…

Q: How do an investment's required rate of return vary with perceived risk? Explain with an example?

A: Required rate of return refers to the rate which the investors expects from their investments. This…

Q: Discuss how diversification reduces firm specific risk.

A: Diversification is investing money in many investments rather than a single investment. In…

Q: Explain the effect of issuance cost on firm value.

A: There are issues cost associated with debt and equity that has impact on  value of firm.

Q: What are the benefits and corresponding risks of Financial Investment?

A: Financial Investments are investments that are made with the expectation to receive future financial…

Q: Explain the types of investment risks with practical examples.

A: Investment risk - Investment risk is the probability of incurring losses from an investment made in…

Q: Explain how a company can use forward contracts to eliminateFX risk

A: Introduction: A forward contract is a contact between two parties regarding the future selling price…

Q: Define within-firm risk

A: Within-firm risk: Corporate (within-firm) risk is a hazard identified with an individual business.…

Q: What is reinvestment rate risk?

A: The reinvestment rate risk is the potential decline in the interest income that tends to be a result…

Q: What is the total investment approach?

A: Total Investment Approach: In the Total Investment Approach, there is a risk-return tradeoff in the…

Q: What is the firm value

A: EBIT = $20,000 every year in perpetuity Cost of equity (ke) = 15%Tax rate (t) = 40%Debt = NIL…

Q: Explain Derivative security?

A: Derivatives security: A derivative security is considered as a financial instrument whose value is…

Q: What are retakaful and reinsurance and how takaful products can be used for hedging purposes?

A: Retakaful and reinsurance : In simple words, The Muslim reinsurance sector is referred to as…

Q: How behavorial bias affect investment behavior?

A: Behavioral bias is the belief by the investors that unknowingly affects the investors investment…

Q: What is risk, and how does it affect decisions about investment?

A: Risk and return are related to each other while making investment.

Q: Which tranche of CDOs offers maximum protection to the investment holder ?

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

Q: Define fair value hedges.

A:

Q: What kind of investment is considered to be risk-free?

A: A risk-free investment is an investment that has a minimum or no fluctuation from the expected…

Q: Describe the Investment-Pool Concept?

A: Investment pools are institutional elements that are pooled speculation structures, with the…

Q: The cost of underwriting is sometimes assessed in terms of the costs of an equivalent PUT option.…

A: Underwriting costs: Means in respect of any underwriting agreement with broker,dealer or other…

Q: What are the differences between bottom-up and top-down approaches to security valuation? What are…

A: A top-down method to security evaluation starts with an examination of the worldwide and national…

Q: What is the relationship of risk to the investment?

A: There is a direct relationship between risk and return in investment decision making. It means…

Q: What is the financial advantage (disadvantage) of accepting the outside supplier's offer?

A: Make or buy decision: It is the decision made by the company to manufacture the product or buy it…

Q: which investment is preferable?

A: The present value is the present worth of the amount that will be paid or received at present.

Q: What is the difference between a competitive bid and a negotiateddeal?

A: Negotiated deal: A negotiated bid contains only one general contractor who works in the best…

Q: What is the main determinant of the level of investment?

A: An investment is simply a financial instrument formed with the goal of allowing money to grow. One,…

Q: Define Seller Financing?

A: Seller financing : Seller financing is real estate agreement which means seller financing the real…

Q: How does the risk return trade-off relate to the financial manager's main goal?

A: The main goal for a financial manager is to generate the maximum value of the firm to its owners.…

Q: What is lead underwriter?

A: Underwriting is a process through which securities of company sale by third party in the market.…

Q: What is meant by sweat equity?

A: Sweat equity is a benefit by the company to its employees for their work.

Q: Illustrate The Underwriting Process?

A: Underwriting is a process by which investment banks generate funds for the organization.

Q: Illustrate how risk related to investment

A: There is a direct relationship between risk and return in investment decision making. It means…

Q: What are the main constraints or obstacles to implementing the investment management concept?

A: Investment management refers to the management of assets of an individual by the firm. It will…

Q: Explain the importance of the excess-capacity issue in setting a competitive bid price.

A:

Q: Define underwriting syndicate

A: An underwriting syndicate is headed by a bank known as the lead underwriter. It is a group of banks…

Q: Describe the process of the Net-Investment Test?

A: The Net-Investment test is done to figure out if an investment is a 'Pure investment' or a 'Mixed…

Q: What is negotiated deals (security offerings)?

A: Negotiated deals are usually referred to in the context of fixed-income securities. The parties…

Q: A firm commitment underwriting is generally safer for the issuing firm compared to the best effort…

A: Underwriting is a technique through which an individual or any financial institution takes a…