PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 15, Problem 9PS
Venture capital
- a. “A signal is credible only if it is costly.” Explain why management’s willingness to invest in Marvin’s equity was a credible signal. Was its willingness to accept only part of the venture capital that would eventually be needed also a credible signal?
- b. “When managers take their reward in the form of increased leisure or executive jets, the cost is borne by the shareholders.” Explain how First Meriam’s financing package tackled this problem.
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See below for some statements on how financial managers can create value for their firms.
Which of the following statement(s) is (are) FALSE?
Select one or more alternatives:
Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG"
in ESG investing stands for environmental, social and governance.
Capital markets are less efficient than goods markets; this is why the primary source of creating value is
through clever financing decisions.
If capital markets are inefficient at times, financial managers could create value through financing decisions.
Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG"
in ESG investing stands for environmental, sustainability and governance.
Chapter 15 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 15 - Vocabulary Each of the following terms is...Ch. 15 - Prob. 2PSCh. 15 - Vocabulary Here is a further vocabulary quiz....Ch. 15 - Stock issues True or false? a. Venture capitalists...Ch. 15 - Prob. 5PSCh. 15 - Prob. 6PSCh. 15 - Prob. 7PSCh. 15 - Venture capital Complete the passage using the...Ch. 15 - Venture capital a. A signal is credible only if it...Ch. 15 - IPOs Refer to Section 15.1 and the Marvin...
Ch. 15 - Prob. 11PSCh. 15 - Prob. 12PSCh. 15 - Issue costs In April 2019. Van Dyck Exponents...Ch. 15 - Underpricing In same U.K. IPOs, any investor may...Ch. 15 - Prob. 15PSCh. 15 - Prob. 16PSCh. 15 - Underpricing Construct a simple example to show...Ch. 15 - Prob. 18PSCh. 15 - Prob. 19PSCh. 15 - Costs of a general cash offer Why are the costs of...Ch. 15 - Prob. 21PSCh. 15 - Prob. 22PSCh. 15 - Rights issues In 2012, the Pandora Box Company...Ch. 15 - Prob. 24PSCh. 15 - Rights issues vs. cash offers Suppose that instead...Ch. 15 - Private placements You need to choose between...Ch. 15 - Prob. 27PSCh. 15 - Prob. 28PSCh. 15 - Dilution Here is recent financial data on Pisa...
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- V4. Which of the following statements is correct? Connection to northeastern.instructure.com was lost. Please make sure you're connected to the Internet before continuing. In perfect capital market, if an investor wants to have high risk and high return, she should only invest in firms with high leverage. In perfect capital market, leverage recap helps a firm to adjust its capital structure so as to increase firm value. In perfect capital market, share repurchase would increase stock value. O Leverage recap does not change firm value in a perfect capital market.arrow_forwardA company should accept for investment all positive NPV investment alternatives when which of the following conditions is true?a. The company has extremely limited resources for capital investment.b. The company has excess cash on its balance sheet.c. The company has virtually unlimited resources for capital investment.d. The company has limited resources for capital investment but is planning to issue new equity to finance additional capital investment.arrow_forwardWhich of the following statements is NOT true? Venture capitalists’ sole function is to provide financing for new firms. Modern venture capital firms tend to specialize in a specific line of business, such as hospitality, food manufacturing, or medical devices. Venture capitalists bear a substantial amount of risk when they fund a new business. A significant number of venture capital firms focus on high-technology investments.arrow_forward
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