When a firm has less current assets to pay off its current liabilities, it has ______ liquidity risk. Such a firm is likely to have _____ returns. Question 32 options: 1) lower, higher 2) lower, lower 3) higher, higher 4) higher, lower
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A: Since you have a question with multiple subparts we will solve the first three subparts for you. If ...
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A: The short sale is a process in which the trader has entered into a contract and sells the share whic...
Q: 13) The financial staff of Cairn Communications has identified the following information for the fir...
A: Operating cash flow refers to the flow of cash from day to day operating activities.
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A: Step1: What is the Internal rate of return(IRR) IRR is regarded as one of the most important Capita...
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A: An ordinary annuity is a series of cash flows that occurs that involves an equal amount of cash flow...
Q: See picture
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Q: $15,000 is deposited for 7 years in an account earning 3% interest. (Round your answers to two decim...
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Q: You decide to make monthly $2000 deposits into an account that pays 4% compounded monthly. If your f...
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Q: What will be the significance of the stock buyback to an investor?
A: Introduction: Stock repurchases ensures that by buying outstanding shares of its own stock, a corpor...
Q: With a firm’s sales revenue of $500,000 and earnings before interest and tax (EBIT) $100,000 and int...
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Q: 2. If a company has a portfolio consisting of 3 stocks as follows: 25 percent, 30 percent, and 45 pe...
A: The return on portfolio is a weighted average of returns on individual assets from which portfolio i...
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Q: Please solve very soon
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A: An investment is an item or an asset acquired with the goal of earning income or appreciation in the...
Q: An investor buys a bond for $1000. She receives $10 at the end of each month for 2 months and then s...
A: The IRR is the rate that equates the cash flows from the bond to the initial price of the bond.
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A: given data land decreased $205200 because of cash sale $205200 the equipment account increased $6840...
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Q: Help me fast
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Q: Use the ordinary annuity formula shown to the right to determine the accumulated amount in the annui...
A: Principal amount = $60 Time period = 10 years Interest rate = 5% Compounded = semi-annually
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A: Installment is the process of reimbursement of loan periodically by the borrower of the loan to the ...
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A: In this question we require to calculate the coupon rate of bond using following details: Face value...
Q: Splish Brothers Inc. purchased treasury stock with a cost of $74800 during 2022. During the year, th...
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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: INFLATION AND INTEREST RATES The real risk-free rate of interest, r*, is 3%, and it is expected to r...
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Q: What is the money market?
A: Introduction: A financial market is a market in which people exchange financial instruments, securit...
Q: Calculate the net price and single equivalent discount. Round to five decimal places when necessary...
A: Formula of Single Equivalent Discount Rate:- = 1-Net Price Factor = 1- 0.5576 ...
Q: alculate the 2002-2005 standard deviation of annual investment returns for a common stock that retur...
A: The term standard deviation refers to the deviation of dataset or returns from the mean of the data,...
Q: Last year, Headline News Corporation paid $600,000 in dividends and retained $360,000 of the earning...
A: Dividend: It is that share of the profit which is distributed among the company’s shareholders.
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- 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.Suppose company Z is already in financial distress and the equity holders are very close to default. Suddenly there is a shock that causes an increase in the standard deviation of the return on company Z's assets. Which of the following correctly describes the new situation faced by company Z? A) Debt value will increase with the shock and equity holder are more likely to default. B) Equity value will increase with the shock and equity holder are less likely to default. C) Both Debt value and equity value will increase but the likelihood of default is unchanged. D) Both debt value and equity value will decrease and the likehood of default will increase.What types of firms would we expect to observe higher direct agency costs of equity, such as consuming excessive perquisites by management ? Question 7 options: a) Firms with high free cash flows b) Firms with fewer growth opportunities c) Firms with weak governance structures d) All of the above options are correct e) None of the options are correct
- Firms will take investments only when expected risks are remunerated by expected profit. * a. Incremental cash flows b. Efficient capital markets c. Risk-return trade-off d. All risks are not equalwhich one is correct please confirm? QUESTION 21 Finance researcher Myron Gordon argues that ____. a. the clientele effect has no influence on share value b. the existence of transaction costs has no impact on the dividend decision c. dividends reduce uncertainty, and thus the payment of dividends will increase the firm's value d. risk-averse shareholders may prefer some dividends over the promise of future capital gains if the interest rate is expected to declineIf a firm cannot invest retained earnings to earn a rate of returngreater than or equal to the required rate of return on retained earnings, it should return those funds to its stockholders. The cost of equity using the CAPM approach The current risk-free rate of return (rRFrRF) is 4.67% while the market risk premium is 5.75%. The Burris Company has a beta of 0.78. Using the capital asset pricing model (CAPM) approach, Burris’s cost of equity is . The cost of equity using the bond yield plus risk premium approach The Taylor Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company’s cost of internal equity. Taylor’s bonds yield 11.52%, and the firm’s analysts estimate that the firm’s risk premium on its stock over its bonds is 3.55%. Based on the bond-yield-plus-risk-premium approach, Taylor’s cost of internal equity is: 18.84% 15.07% 14.32% 18.08% The…
- Which of the following statements are incorrect regarding how much debt a company should borrow? Choose all that apply. Question 9 options: A As long as the company can generate higher returns on its new projects than its borrowing interest rate, borrowing more debt will enhance the company's ROE. B Borrowing more debt will increase a company's distress level. C The bigger the company, the more it should borrow D Debt is considered a more expensive capital source._______ DOES NOT affect a firm's business risk. Question 9 options: A ) Revenue variability B) Input price variability C) Demand variability D) The extent to which interest rates on the firm's debt fluctuate E) The extent to which operating costs are fixedIs the following sentence true or false? Please explain. The cost of new equity (re) could possibly be lower than the cost of reinvested earnings (rs) if the market risk premium, risk-free rate, and the company's beta all decline by a sufficiently large amount.
- Suppose that as the economy moves through a business cycle, risk premiums also change. For example, in a recession, when people are concerned about their jobs, risk tolerance might be lower and risk premiums might be higher. In a booming economy, tolerance for risk might be higher and premiums lower.a. Would a predictably shifting risk premium such as described here be a violation of the efficient market hypothesis?b. How might a cycle of increasing and decreasing risk premiums create an appearance that stock prices “overreact,” first falling excessively and then seeming to recover?According to Modigliani & Miller M Proposition II (MM Il), as a firm's debt-equity ratio decreases, what happens to the required rate of return on equity? Briefly explain including the key aspect of MM II.Which of the following statements are true and which are false? o). High breakeven points in capital intensive industries are desirable. p). The fixed return on borrowed capital (i.e., interest) is more risky than profits paid to equity investors (i.e., stockholders) in a firm.
