Questions from Corporate Finance


Q: A convertible bond has a conversion ratio of 24.6.

A convertible bond has a conversion ratio of 24.6. What is the conversion price?

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Q: True or false: All assets are liquid at some price.

True or false: All assets are liquid at some price. Explain.

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Q: If you can borrow all the money you need for a project

If you can borrow all the money you need for a project at 6 percent, doesn’t it follow that 6 percent is your cost of capital for the project?

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Q: Consider the following statement: For the APT to be useful,

Consider the following statement: For the APT to be useful, the number of systematic risk factors must be small. Do you agree or disagree with this statement? Why?

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Q: Why do we use an after tax figure for cost of debt

Why do we use an after tax figure for cost of debt but not for cost of equity?

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Q: Why do we use an after tax figure for cost of debt

Why do we use an after tax figure for cost of debt but not for cost of equity?

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Q: What is the main difference between the WACC and APV methods?

What is the main difference between the WACC and APV methods?

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Q: Taxes are an important consideration in the leasing decision. Which is

Taxes are an important consideration in the leasing decision. Which is more likely to lease: A profitable corporation in a high tax bracket or a less profitable one in a low tax bracket? Why?

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Q: What are the cash flows from the lease from the lessor’s viewpoint

What are the cash flows from the lease from the lessor’s viewpoint? Assume a 35 percent tax bracket.

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Q: What are the two options that many businesses have?

What are the two options that many businesses have?

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