What is the pecking order hypothesis, and how does it influence firms’ capitalstructures?

Q: What’s the risk of competition on financial markets and institutions profitability?

A: Competitive risk or Risk of Competition is the force that will hinder the organization in achieving…

Q: Why do wide variations in the use of financial leverage occur across industries and among individual…

A: The firm uses leverage to minimize the cost of capital and that differs from industry to industry.

Q: what determines the market value of a company?

A: Market esteem (otherwise called OMV, or "open market valuation") is the value a resource would get…

Q: what is financial leverage and its implications for company performance?

A: Company borrow amounts to buy assets and do business.

Q: The financial leverage implications for company analysis?

A: 1. Financial Leverage: To finance the New Assets management borrowed money. it is called financial…

Q: How does additional debt in a firm influence its WACC? its free cash flow (FCF)? the agency costs of…

A: Debt is the presence of additional financial leverage in the total business and it will be having…

Q: api

A: How does asymmetric information affect corporate financial markets? In simple words, the asymmetric…

Q: What is meant by the ''institutionalization'' of capital markets?

A: ''Institutionalization'' of capital markets refers to the gradual domination of the capital markets…

Q: What does it mean for a financial market to be considered (a) informationally efficient and (b)…

A: The financial market is a market where investors and traders buy and sell securities at a low price…

Q: How can the components of working capital affect the cash position of a firm?

A: The question is based on the concept of working capital and effect of change in working capital on…

Q: What is the role of investment banks and how can they help companies raise capital?

A: Solution-   Investment banks are a bridge between investors and also the massive enterprises. The…

Q: What is a firm’s business risk? operating leverage? How does the operating leverage affect the…

A: A business can be defined as the entity or organization established to earn profit by providing…

Q: How had dividend policy been used by firms as a “signal”. Why is it necessary for firms to send such…

A: Dividend is paid by the firm to the investors as a return. It can be paid in cash or stock. Dividend…

Q: Why does the Businesses go to the capital markets?

A: Capital markets are a place where the process of channelization of savings and investments takes…

Q: How can an unlevered firm uptain financial leverage

A: Unlevered firm is a firm with no debt in its capital structure. It does not have any financial…

Q: How does operating leverage affect business risk?

A: If an organization has high fixed expenses or cost, and if an organization experiences issues…

Q: Should firms focus on book value or market value capital structures? How would the calculatedWACC be…

A: In all actuality, the organization will have the option to utilize the capital structure dependent…

Q: What is market efficiency? How do we characterise efficiency in financial markets? Briefly explain…

A: Market efficiency refers to the degree to which market prices reflect all available, relevant…

Q: Discuss the relationship of politics and the economy. How does it affects the stock market

A: There exists a systematic relationship between politics and the economy.

Q: What is the stock market? How do you explain its significance to an economy

A: A stock market is a very important and a very significant part of a country's economy.

Q: What is the relationship of WACC to the market value of a company?

A: A company's capital structure is the specific mix of debt and equity it employs to fund its overall…

Q: What is Competitiveness and how it affects financial market. Identify the risks that may arise.

A: The search for long-term competitive advantage is an important part of all business activity – one…

Q: How can you estimate the business risk of a firm?

A: Beta is the systematic risk. As a company opts to make decision to the best of interest, it is…

Q: What constraints affect dividend policy?

A: Stability of earnings is one of the important factors influencing the dividend policy. If earnings…

Q: When does a firm said to have a complex capital structure?

A: Capital structure of a company means mixture of debt and equity sources of finance of the company…

Q: What is “catering theory,” and how does it impact a firm’s dividend policy?

A: Earnings of the firm can either be distributed as dividend to the shareholders or retained as…

Q: When does a firm said to have a simple capital structure?

A: The capital structure of a company means a mixture of debt and equity sources of finance of the…

Q: What is meant by catering theory, and how might it impact a firm’s dividend policy?

A: Dividend policy refers to the policy which a company may have with respect to the payment of…

Q: Explain pecking order theory (capital structure)

A: The main outline of pecking order theory is that managers of the company generally prefer three main…

Q: What is the principal problem involved in using a dividend valuation model to value companies whose…

A: The Dividend Discount Model (DDM) is a quantitative method of valuing a company's stock price that…

Q: How do you measure Return on Investment (ROI) of alogistics firm?

A: Return on Investment (ROI) :               It represents the benefits earned by the investor in…

Q: What is the Equity Multiplier for the firm in the picture?

A: Equity multiplier shows the proportion of assets which is financed by equity. When equity multiplier…

Q: How do managers, bankers, and security analysts use trend analysis, bench-marking, percent change…

A: Usually a managers, bankers, and security analysts use financial tools and techniques to measure and…

Q: What is Weighted Average Cost of Capital or WACC? How can current economic and political…

A: Weighted average cost of capital is the cost of capital to the firm inclusive of the cost of capital…

Q: How do firms use long-run planning models to help set dividend policy?

A: The term Dividend denotes that a part of company's net profit which is available for equal…

Q: Why is the WACC (weighted average cost of capital) important? When is it useful to a company?

A: Weighted average cost of capital is important to determine the minimum required return of all the…

Q: what role primary financial markets play in the current economy? What role do secondary markets…

A: The primary market is the place where the company issued the securities to the general public. The…

Q: How can the fundamental price of a firm contribute to the wealth maximization of a firm?

A: The fundamental price of a firm depends on its intrinsic value which is dependent on the present and…

Q: What is Hedging principle and how it can be used to manage the working capital of the firm?

A: Investment in current assets has been used to fund the company's working capital requirements.…

Q: Why doesn’t total stockholders’ equity equal the market value of the firm?

A: Stockholders’ equity:   Stockholders' equity means the net claim of owners of corporation on the…

Q: Why do you consider the relationship between the economy and the stock market an integral part of…

A: Economy and stock market movements are directly related. Stock markets reflect the economic…