Securitization has its upside (primarily liquidity and diversification), but it has its downside as well. Which of the following are potential downsides to securitization? Choose the best answer. Select one: Tax-avoidance and regulatory-avoidance Non-transparency Agency costs All of the above
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Securitization has its upside (primarily liquidity and diversification), but it has its downside as well. Which of the following are potential downsides to securitization? Choose the best answer. Select one: Tax-avoidance and regulatory-avoidance Non-transparency Agency costs All of the above
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- Which of the following contentions concerning the static trade off theory of capital structure are true? (i) The optimal capital structure depends upon both the value of the tax shield and on the costs of financial distress. (ii) Costs of financial distress decrease as the amount of debt in the capital structure increases. (iii) The value of the tax shield increases as the amount of debt in the capital structure decreases. (iv) The cost of financial distress does not depend upon the nature of the firm's assets. O Only (i) and (iv) are true. O Only (iv) is true. O Only (i) is true. None are true. O Only (ii) and (iii) are true.Which of the following statements is true about perfect capital markets? Group of answer choices There are transaction costs. There are taxes There are differences in opinion. Capital markets are perfectly competitive.Capital Asset Pricing Model is based on certain assumptions, which have been criticized after empirical testing of the model. Discuss the critique of the model in the context of those assumption. Also discuss the empirical findings of the CAPM. What sort of models have been presented to overcome the drawbacks of CAPM?
- I. Explain the tradeoff between the costs of having too much liquidity on the one hand and financial distress and insolvency on the other hand. II. What gives rise to, or causes, each. III. Give an example explaining both.You want to argue against the taxation of interest income. a) Which simple interpretation of the Atkinson-Stiglitz result can you use for your argument? b) Which restrictions regarding its assumptions do you have to consider for this model in general? c) Which theorem could you use for your argumentation and how? d) Which objection of a growth theorist could you be confronted with?Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?
- In general, what is true of people's risk aversion for changes in income that are marginal (i.e., very small changes in income)? (a) They are less risk averse. (b) Their risk aversion does not change. (c) It depends on the shape of the individual utility function. (d) They are more risk averse.Define and explain the agency problem in terms of differences in ability to diversify risk by finance and human capital. Why does it arise? What are the mechanisms available to ameliorate the agency problem?Both the capital asset pricing model and the arbitrage pricing theory rely on the proposition that a no-risk, no-wealth investment should earn, on average, no return. Explain why this should be the case, being sure to describe briefly the similarities and differences between the CAPM and the APT. Also, using either of these theories, explain how superior investment performance can be established.
- 1)-What is the difference between the “Organic View” and the “Mechanistic View” of government? What are the three (3) Foundation questions of Public Finance? Completely describe an "Efficiency Loss.” What is the Laffer curve and why is it an inappropriate example of Efficiency Loss? When the government does intervene, why is a subsidy of the private market simultaneously a good and bad idea? What is an example of a Direct Effect in Public Finance? What is an Indirect Effect on Public Finance? What is Asymmetrical Information and how does it affect Public Finance? 2)What is the difference between Absolute and Relative prices? What is the Income Consumption Curve, and how is it used to distinguish between normal and inferior goods? How is Income elasticity different from Price Elasticity? How can you show how a change in the price of one Good with no change in Income leads to the Substitution Effect? Considering individual preferences as well as income and prices, how can Consumer…What are the main criticisms of the Capital Asset Pricing Model (CAPM)? What does the empirical evidence suggests regarding the validity of CAPM? Provide detailed explanations and studies referring to each criticism.3. Changes in discretionary fiscal policy (e.g., taxes) and automatic stabilizers (e.g., unemployment insurance benefits) can have significant unintended effects on all of the following except the incentive to spend. the incentive to save. the incentive to work. the incentive to purchase imported goods. TOSHIBA