Define each of the following terms:a. Capital; capital structure; optimal capital structureb. Business risk; financial riskc. Financial leverage; operating leverage; operating breakevend. Hamada equation; unlevered betae. Symmetric information; asymmetric informationf. Modigliani-Miller theoriesg. Trade-off theory; signaling theoryh. Reserve borrowing capacity; pecking orderi. Windows of opportunity; net debt

Q: According to financial bep, what is the position of bep, what will be the operation if there is only…

A: Financial break even point is a point where earnings before income tax is equal to financial cost of…

Q: nciples of Finance.

A: Every firm or corporation has some principles for running the business. There are also some finance…

Q: What is the risk-return tradeoff that arises when . firm manages its working capital? Give tangible…

A: Financial risk is referred as the possibility or chance of losing the investment, basically an…

Q: Explain how to classify working capital according to its “components” and according to “time” (i.e.,…

A: Working capital is the capital of excess of current assets over current liabilities. Working capital…

Q: What weights should be used when you calculatethe WACC? Discuss the choice between book value and…

A: The weights should be used on a proportionate basis of equity, debt, and preferred stock when WACC…

Q: a. What is the meant beta (β)? How would you interpret if β=1, β>1 and β<1?

A: Beta coefficient shows the systematic risk of the assets. The beta factor shows the systematic risk…

Q: For purposes of computing the WACC, if the book value of equity exceeds the market value of equity,…

A: WACC is the weighted average cost of capital of the capital sources of a firm. It includes equity,…

Q: This is a generalized framework for analyzing the relationship between risk and return: a. capital…

A: Risk refers to the uncertainty related to the investment within the future. Risk arises within the…

Q: Describe the capital asset pricing model and explain the role of beta as a risk measurement tool.

A: Answer

Q: Which of the following decision criteria is the easiest to use and very popular among investors?…

A: The capital budgeting process uses different methods to analyze the projects. Each method has…

Q: Contrast investor's use of capital markets with their use of money markets

A: Capital market is basically the one where long term securities are brought and sold. Stock Market ,…

Q: Evaluate the advantages of equity financing.

A: It is the process of selling a portion of business in exchange of  an investment in cash.It does not…

Q: Which of the following statements is correct? Multiple Choice   All of the statements are…

A: Option d. An increase in the market risk premium is likely to increase the weighted average cost of…

Q: How would each of the following scenarios affect a firm's cost of debt, ra(1-T); its cost of equity,…

A: Weighted average cost of capital (wacc) is calculated as sum of the after-tax cost of debt and cost…

Q: explain the strategies that enhance the return on equit

A: Return on equity is a very important financial ratio. This ratio is essentially a measure of…

Q: one of the following is true regarding the business and financial risk: Select one: a. the business…

A: Business risk refers to that type of risk which involves the decline in profitability and stability…

Q: describe valuation using free cash flows for all debt and equity stakeholders as well as free cash…

A: Free cash flow valuation is a technique used to determine the intrinsic value of a firm which…

Q: Question #5. When calculating the weighted average cost of capital (WACC), should we use market…

A: There are various sources from where the company can raise the finance such as equity financing,…

Q: 7.) Describe the debt and equity markets? How do organizations obtain financing from each market?…

A: Debt is considered riskless, however equity securities have some inherent risk.

Q: Using the equity method for reporting strategic investments, how does investment revenue and…

A: A company uses equity method for reporting investments when its ownership interest in the investee…

Q: Which of the following factors influence a firm's ability and/or willingness to pay dividends?   a.…

A: A dividend refers to the distribution of profits to the shareholders of the company. A dividend is…

Q: 1. Which of the following models for mathematics of the financial markets is dependent on…

A: "Since you have asked multiple question we would be solving first question ,If you want any specific…

Q: Which of the following can be categorized as Short term sources of finance ?i Equity Sharesii Trade…

A: Short term sources are finances are those sources of finance for the business which is available for…

Q: Distinguish between different levels of financial market efficiency. Give examples to illustrate…

A: The degree of reflection of all the information about an asset and the company issuing it in the…

Q: Calculate the financial leverage - equity multiplier and cash cover ratio

A: Equity Multiplier = Total Assets/Total Equity 2019 = 22,634,774/9,538,652 = 2.373 2020 =…

Q: 3. Which of the following are acceptable criteria for determining the weights in the weighted…

A: WACC is required for estimating the cost of acquiring the funds to do the business.

Q: Is there an easily identifiable debt-equity ratio that will maximize the value of the firm？support…

A: No, it is not easy to identify a debt-equity ratio, which would increase the firm’s value.

Q: Define cost of equity? How does it relate to the ‘required rate of return’ (r) on equities?

A: Definition of Cost Equity: Cost of equity is the return that a company requires for an investment or…

Q: All business decisions involve aspects of risk and return. Rank order the following investment…

A: Risk and return are the two most important factors in considering any business decisions as it…

Q: Which of the following is concerned with the relationship between the firm's EBIT and EPS? * a.…

A: Solution: Degree of financial leverage (DFL) is a ratio that measures the sensitivity of a earnings…

Q: Multiple Choice Questions 1. The following are the factors to be considered in Suitability, except…

A: 1. Suitability analysis is analyzing the manner in which the land quality matches which land's use.…

Q: Briefly discuss the pros and cons of the three (3) approaches used by analysts to value a company’s…

A: Valuing a company’s equity means determining the value of equity for the firm. It is very important…

Q: Identify the players in the financial markets and given examples of these?

A: Financial markets are markets where people trade financial securities and derivatives at low…

Q: Define financial fiexibility and use an innovative decomposition of return on common equity to…

A: Financial flexibility is defined as the ability of the company for reacting to an unexpected…

Q: Discuss how the concept rbitrage profit help estab- um in capital markets. Di:

A: The equilibrium of the stock market involves setting market prices such that supply equals demand…

Q: Which are functions of financial markets? Check all that apply: O Maturity intermediation Risk…

A: Financial markets are important in the economy of country and they play very bigger role in the…

Q: Cost of capital O can be calculated with CAPM O is different of the WACC reflects only equity…

A: Solution 1:- Cost of capital means the minimum rate of return required by the fund providers, which…

Q: The relationship between WACC and investors' required rates of return The required rate of return of…

A: WACC is the weighted average cost of capital. It is minimum return company should achieve to accept…

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…

Balance Sheet Regulations

A balance sheet is a financial statement that shows the position of a company's assets and liabilities on a specific date. The balance sheet is prepared after preparing the statement of profit and loss statement (income statement). The balance sheet and other financial statements differ in the sense that the balance sheet shows the financial position at any given point in time. In contrast, the other financial statements show the financial performance over a particular duration.