What are the implications of excess liquidity for the stability of the financial sector?

Q: why an increase in cost of debt will increase cost of capital associated with business risk and…

A: The cost of capital is the minimal rate of return that a company must earn before it may generate…

Q: Is it financial expediency for firms to borrow?

A: The acquisition of debt funds by businesses is far more convenient than any form of funds and far…

Q: Which of the following is the risk due to a firm's industry?      Business risk     Financial…

A: In the ever-changing landscape of finance and investments, understanding different types of risks is…

Q: xplain what is meant by the term ‘financial distress’. If we assume that financial distress exists,…

A: Explain what is meant by the term ‘financial distress’ Answer: Meaning of  'Financial distress' -…

Q: How does additional debt in a firm influence its WACC? its free cash flow (FCF)? the agency costs of…

A: Debt is the presence of additional financial leverage in the total business and it will be having…

Q: Which of the following is not a function of financial markets?     Scope transformation…

A: Financial markets, as the name implies, are a type of market that provides a way to buy and sell…

Q: novation cau

A: Financial markets exhibit asymmetric information in any transaction in which one of the two parties…

Q: What are the implications of the transformation function for the liquidity position of the bank?

A: Answer: Introduction: Liquidity is nothing but the ability of the bank to turn money into cash and…

Q: What approach banks may take to determine adequate capital?

A: For a bank it is highly important to ensure capital adequacy. Capital adequacy leads to stability of…

Q: what is the relationship between management of business finance and company`s financial performance…

A: Managing Business Finance means to utilize the funds of the business out of various means such as…

Q: What is capital rationing, what conditions lead toit, and how should it be dealt with?

A: Capital budgeting is a process in which capital projects are assessed in terms of their viability…

Q: What allows financial institutions to generate a profit? What are the conditions under which their…

A: THE INTRODUCTION: The marketplaces where financial assets and instruments are traded and the sites…

Q: how do banks improve their net profit margin to increase Return on Equity?

A: Return on Equity (ROE) measures the company’s net income to the value of its total shareholders’…

Q: Which liquidity risk measurement strategy is best for a financial institution to take when is unable…

A: Current liabilities refer to the short-term debt obligation of a company which includes creditors,…

Q: it better to finance a company thru debt or thru equity? Why? What are the downside and upside to…

A: A business can raise funds predominantly either by  Issuing Equity, or Borrowings Loans, Issuing…

Q: What are the possible actions that a firm can take if it experiences a financial failure?

A: Financial failure of the firm could be resulted because of overspending, higher degree of illiquid…

Q: What is a financial failure and what causes financial failures?

A: Financial failure is one of the most common issues in the market. Companies can face it because of…

Q: Deferring roles of financial institution play in economy

A: Financial institutions, also referred to as the banking institutions, are the corporations that…

Q: How does a short-term cash flow crisis impact a firm's competitive strategy?

A: It is very important for any business to have cash in hand or at the bank for meeting day-to-day…

Q: Which financial statements are more useful to consumers than others when it comes to cash flow…

A: The question tells about financial statements are more useful to consumers than others when it comes…

Q: Liquidity dry up could cause a financial institutions to become balance sheet insolvent. Briefly…

A: Liquidity dry up occurs when financial institutions have a shortage of accounting, funding, and…

Q: How banks can improve their return on equity and what are its negative externalities.

A: RoE is ubiquitous in banks, serving as both an indicator of overall performance and a means of…

Q: how can businesses effectively manage their liquidity and profitability through understanding…

A: Effectively managing liquidity and profitability is crucial for the financial health and success of…

Q: How can we determine the firm's liquidity?

A: Liquidity: It can be defined as the ease or comfort with which a firm can convert its securities and…

Q: Balance Sheet Insolvency occurs when Liabilities are greater than the Assets resulting in negative…

A: Insolvency Risk: Insolvency risk is a probability that an enterprise cannot satisfy its debt…

Q: How does credit risk for a financial institution differs from default risk and What are the problems…

A: Lender loans money to the borrower, and there subsist as the risk of non-repayment of loan or…