What is the major drawback of debt financing? Select one: You have to pay back the money Increasing debt changes the gearing ratio of the firm Interest payments must be made before shareholder dividends and irrespective of fluctuations in profits Lenders often require security of the loan against assets of the company

Q: As a potential investor would you prefer to invest in a structured note? Why or why not?

A: Note: Since you have posted multiple independent questions in the same request, we will solve the…

Q: Although the major benefit of debt financing is easy to observethe tax shield-many of the indirect…

A: Debt financing is the borrowed money that a person pays back the money with interest with a…

Q: What are the reasons that highly profitable firms use debt financing? 1 they have sufficient…

A: Bank is an institute which gives umbrella when sky is clear but sits back when its raining. So…

Q: The RBA decides to buy bonds and securities from commercial banks on the open market. Other things…

A: When RBA buys bonds in the open market, the money supply in the economy increases, as it buys…

Q: QUESTION 4 Which of the following statements is correct? O A. The tax benefit from using debt…

A: The leverage of the firm indicates the level of debt employed by the organization. If the usage of…

Q: The company cost of capital depends on current profits and cashflows, which measures what investors…

A: The corporate cost of capital is reflective of the cost of average projects of the company and…

Q: When the firm gets acquired by a better fundamental company, does that increase, decrease, or have…

A: A credit spread is the difference in yield of a US Treasury security and the yield on a corporate…

Q: Is this statement true or false? Please explain in detail As debt-financing is usually cheaper than…

A: Debt financing is a cheaper source of finance than equity financing because tax saving on interest.…

Q: One way that debt holders can add some "protection" to their claim on the firm's assets is to add…

A: Debt covenants, whether affirmative or negative, act as a protective layer for debt holders. They…

Q: 4. Which of the following is false about the risk-shifting problem? Risk-shifting leads to a…

A: Risk shifting is an agency problem which arises when the company takes more debt thereby increasing…

Q: Which of the following is a disadvantage of long-term debt as a means of company financing? Group…

A: Funds are very important and necessary for smooth running of a business organization. A business has…

Q: Debt allows an economy to appear very large but debt also creates more ____ in an economy.…

A: