at is the partial equity metho

Q: Why is the return associated with common stock referred to as a residual claim? Contrast this kind…

A: Common stock holders are the owners of the business. Profits earned by the company will be the…

Q: What are the relative advantages of equity versus debt financing?

A: Equity financing is selling a stake in your firm in return for a monetary investment. In contrast to…

Q: When screening for potential equity investments based on return on equity, to controlrisk, an…

A: Return on equity = Net Income / Shareholder's equity

Q: What is the cost of equity based on the own-bondyield-plus-judgmental-risk-premium method?

A: Answer: Bond-yield-plus-judgemental-risk-premium method involves adding a judgemental risk premium…

Q: Discuss how prospect theory explains the equity premium puzzle?

A: The equity premium puzzle means outperformance of stocks over Treasury bills,  which is based on…

Q: Are assets: (a) always lower than liabilities or (b) financed by the stockholders' equity?

A: Assets are the property of the business which can be converted into money and which gives benefit to…

Q: What is the effect of a company electing the fair value option with respect to an investment that…

A: Equity method: Equity method is the accounting method used for accounting equity investments which…

Q: Do you think the partial equity method is the best choice of methods to use for every companies…

A: When a company invests in another corporation, it uses the partial equity technique to account for…

Q: In what ways is preferred stock like long-term debt? In what ways is it like equity?

A: Preferred stocks are issued to raise capital for the firm. Other forms of fund raising methods are…

Q: Which

A: Preferred stock is a special type of stock in which shareholder get Fixed dividends and does not…

Q: hat is Return on Equity (ROE), and why is it important?

A: The ratio refers to a measure used by the companies and investors to determine the company's…

Q: What are the primary differences between debt financing and equity financing?

A: Financing refers to providing the funds to the business for business activities, individuals and…

Q: What are the similarities and differences in equity valuation and bond valuation?

A: Bonds: Bonds are a debt instrument on which interest is paid. They can be issued at a discount/par…

Q: Outline the advantages and disadvantages of dealing with preference shares from debt holders’ point…

A: A company has several sources from where it can raise funds. It can issue equity shares and the…

Q: What are the differences and similarities between debt financing and equity financing?

A: Similarity between debt and equity finance. 1 Both bonds and equity are traded in market. 2 Prices…

Q: Why does have equity habve a higher vost of capital compared to debt?

A: Reasons why equity have higher cost of capital than debt is 1) Debt has tax advantages I,e tax…

Q: What is the difference between debt and equity financing?

A:

Q: What is the classification of Equity investments for which the investor does not have significant…

A: When a equity investment is made and if such investment does not result in significant influence,…

Q: Why might conflicts arise between stockholders and debtholders?

A: A stockholder or a shareholder can be an individual or a company who own one or more shares of a…

Q: Define Return on equity (ROE)

A: Ratio analysis is said to analyze the relationship between two variables and this is the…

Q: How does a company determine whether to account for an equity investment using the fair value…

A: Financial Management: In layman’s words, financial management is the management of the finance or…

Q: Write down what are the disadvantages of shareholders equity?

A: Equity is one of the common sources to raise finance. Whenever a company requires finance it can…

Q: Is it possible to view a firm's equity as an option? What could be the implications?

A: Let's recall the following two points:Basic accounting equation: Assets, A = Equity, E +…

Q: Is share dividend payable a current or a non current liability? Explain your answer.

A: The dividend is payable to shareholders on a number of shares they hold as of the date of…

Q: What’s is the Return on Average Equity?

A: The return on average equity (ROAE) is a financial metric that helps to evaluate the profitability…

Q: Explain return on equity (ROE)

A: Return on Equity : Return on equity is the return or earning of an organisation on its invested…

Q: An attribute of an equity instrument is that:    A. it is always issued at par value.   B. the…

A: Equity instrument is a document that shows the ownership or holding of a person in an entity.

Q: For purposes of measuring a firm’s leverage, should preferred stock be classified as debt orequity?…

A: We cannot categorize preferred stock as entirely debt or equity. It is a mixture and is alike bonds…

Q: Why is the Equity Valuation method is preferable from the point of view of an investor in valuing…

A: Valuation is the process of ascertaining the market value of the business or an asset. The valuation…

Q: to

A: Why do we use the market value of debt and equity to estimate WACC instead of the book value :…

Q: The interest rate at which the MARR is established depends principally upon the cost of capital and…

A: Cost of capital is the cost will be incurred on capital employed. cost of capital is the weight…

Q: List methods used to value equity instruments

A: The three primary equity valuation models are the discounted cash flow (DCF), the cost, and the…

Q: How does equity valuation differ from bond valuation

A: The term equity valuation refers to all the methods and techniques used by the investors to compute…

Q: Is there a readily recognisable debt-to-equity ratio that maximises a firm's value? What are your…

A: The debt-to-equity ratio is derived by dividing a company's total debt by its total equity. This…

Q: Explain return on common equity (ROE)

A: Return on equity is calculated by dividing the net profit by shareholder's equity. Shareholders'…

Q: Explain what is meant by an equity carve-out

A: Equity carve-out is a way to separate a business unit from the overall company. It is usually done…

Q: ate at which the MARR is esta

A: Cost of capital is the weighted average cost of debt and equity financing.

Q: Which of the followings is not one of the components of ROE under the Du Pont analysis/identity?…

A: The ROE ratio determines the return on equity. The Du Pont analysis helps the company to analyze the…

Q: What is the quoted equity instrument

A: An equity instrument refers to a document which evidences  the ownership right in a company. Equity…