1. Explain briefly on “Relevant Cost & Irrelevant Cost”. 2. “What is Financial Leverage”? Explain with appropriate illustration. 3. Explain the cocept of “Systematic & Non-Systematic Risk”. 4. Why is preference capital considered as a hybrid source of financing?

Q: The principle of gearing 2. Why debt is cheaper than equity 3. What the effect will be on the risk…

A: Gearing is the debt-to-equity relationship or ratio of a firm. Gearing indicates how much of a…

Q: What is meant by the term financial leverage?

A: Borrowed Capital: The money which is borrowed by a company from outsiders for a specified period of…

Q: What are some of the risks involved in short-term vs. long-term financing ?

A: Financing refers to providing or borrowing capital so as to run the operations of the business…

Q: There are two best source of financing the flexibility and Risk. How may one determine the best…

A: Source of financing: It means provision any business entity makes to cover it daily operational…

Q: What is the difference in perspective between finance and accounting?   Multiple Choice   timing…

A: The focus of accounting is on recording of day to day flow of money while finance focuses on the…

Q: What is meant by positive financial leverage?  What about negative financial leverage?

A: Leverage -It refers to the use of source of funds  for which the firm has to pay a fixed cost.

Q: Other than CAPM what other model can be used in valuing equity and WACC. Also list the assumptions…

A: The financial information can be analysed and presented using various types of models and frameworks…

Q: Explain Simple versus Nonsimple Investments?

A: The question is based on the concept of different way of investments.

Q: Compare and contrast financing with debt vs. equity.  What is being financed?

A: Financing refers to raising the funds from different sources in order to carry out the business…

Q: D6) Explain the concept of financial leverage and distinguish between positive & negative financial…

A: Financial leverage refers to the outcome of the usage of borrowed capital to make an organization's…

Q: The W.A.C.C. is a :  a Composite opportunity cost metric  b Simple opportunity cost metric  c…

A: The overall cost of capital, also known as the Weighted average cost of capital (WACC), is the…

Q: , How is the ability-to-pay principle (c) different from the benefit principle? Briefly discuss the…

A: Introduction:-  Ability to pay—A tax fairness idea that asserts that persons with various levels of…

Q: Behavioural finance deals with two main issues: Information processing areas & behavioural biases.…

A:

Q: According to Capital Asset Pricing theory (CAPM), in a competitive marketplace: Group of answer…

A: Capital Asset Pricing Model(CAPM) is an investment tool used to determine the fair valuation of…

Q: How do you call a strategy that separately examines capital market conditions and the investor's…

A: The strategy is called as “Integrated Asset Allocation Strategy”.

Q: What is meant by asset transformation and how is it the basis for differentiating between indirect…

A: Finance transformation can be defined as a business-wide combination of process, system, and culture…

Q: The cost of capital is a hurdle rate. Is this statement true? Why or why not?

A: The question is based on the concept of minimum required rate for any project . Hurdle rate is the…

Q: The Capital Asset Pricing Model is usually adopted in a variety of circumstances but it does have…

A: Capital Asset Pricing Model: The relationship between expected return of a stock  and systematic…

Q: When estimating the cost of equity in the context of the Capital Asset Pricing Model (CAPM), the…

A: The target capital structure is the capital mix that is used by the firm by procuring funds from…

Q: What is Basic Calculations of Financial Leverage?  Please provide example.

A: Financial Leverage:It represents that how a company uses its debt to acquire assets. It also shows…

Q: Implied cost of capital approach can be used in determining the discount rate in equity valuation:.…

A: The implied cost of capital approach will be focusing upon finding out a discount rate which will be…

Q: Briefly define capital risk and explain how a positive leverage-adjusted duration gap can contribute…

A: Capital risk is the potential of loss of part or all of an investment. It applies to the whole gamut…

Q: What is financial leverage? Explain the concept in relation to fina

A: Financial leverage: Financial leverage is the borrowing of debt to finance assets of the…

Q: apital gain yield (CGY) can be either positive or negative.   Select one: True False

A: Capital gains yield is the percentage increase in the value of an investment. It's calculated by…

Q: Which combination of investment policy and financing policy related to working capital provides the…

A: A relaxed current asset investment policy is one under which relatively large amounts of current…

Q: Do we utilize the historical costs of existing debt and equity to compute the cost of capital, or do…

A: The Answer

Q: Which of the following is NOT a principle of finance? Select one: O a. company advantage O b.…

A: Finance can be referred to as the study of the allocation of assets and liabilities as per the risk…

Q: Lower financial leverage is related to the use of additional   O   a.   Debt financing   O…

A: Financial leverage refers to the amount of money borrowed by a company to finance its assets and new…

Q: The overall capitalisation rate and the cost of debt remain constant for all degrees of financial…

A: Capital structure refers to the combination of debt and equity in the mode of financing of the…

Q: What is the difference between financial leverage and operating leverage

A: Operating leverage: Operating leverage is a sign of how a corporation's costs are organized and is…

Q: What is the crossover rate, and how does it interact with the costof capital to determine whether or…

A: The rate at which the net present value (NPV) of 2 ventures is equivalent is the crossover rate…

Q: True/False. The optimal amount of debt produces the highest weighted average cost of capital. Group…

A: Solution- The optimal amount of the debt produced the highest weighted averagecost of capital.-False

Q: What is one classification scheme that firms often use to obtain risk-adjusted costsof capital?

A: The question is based on the concept of risk-adjusted costs of capital with consideration of…

Q: What are some of the problems is using AFN equation to estimate AFN rather than the pro-forma…

A: AFN (Additional funds needed)=Projected increase in assets-spontaneous increase in liabilities-any…

Q: what are the benefits/risks of financial leverage?

A: Financial leverage is a condition wherein a company raises funds through the issue of additional…