Fundamentals of Financial Manageme...
Fundamentals of Financial Manageme...
Give two reasons stockholders might be indifferent between owning the stock of a firm with volatile cash flows and the stock of a firm with stable cash flows.
To discuss: The reasons for stockholders will be indifferent between owing the firm’s stock with volatile cash flows and stocks with stable cash flows.
Introduction:
Stock is a type of security in a company that denotes ownership. Every company can raise the capital by way of issuing stocks.
The reasons for stockholders will be indifferent between owing the firm’s stock with volatile cash flows and stocks with stable cash flows are as follows:
At the time when the firm, removes the volatile cash flows by means of risk management techniques cannot change the expected future cash flows and weighted average cost of capital (WACC)...
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