Questions from Corporate Finance

Q: Are stockholders and creditors likely to agree on how much cash a

Are stockholders and creditors likely to agree on how much cash a firm should keep on hand?

Q: What costs are associated with carrying receivables? What costs are associated

What costs are associated with carrying receivables? What costs are associated with not granting credit? What do we call the sum of the costs for different levels of receivables?

Q: What is prepackaged bankruptcy? What is the main benefit of prepackaged

What is prepackaged bankruptcy? What is the main benefit of prepackaged bankruptcy?

Q: Evaluate the following statement: Managers should not focus on the

Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an over emphasis on short-term profits at the expense of long-term profit.

Q: Why do companies issue options to executives if they cost the company

Why do companies issue options to executives if they cost the company more than they are worth to the executive? Why not just give cash and split the difference? Wouldn’t that make both the company an...

Q: Suppose two athletes sign 10-year contracts for $80 million

Suppose two athletes sign 10-year contracts for $80 million. In one case, we’re told that the $80 million will be paid in 10 equal installments. In the other case, we’re told that the $80 million will...

Q: With regard to bid and ask prices on a Treasury bond,

With regard to bid and ask prices on a Treasury bond, is it possible for the bid price to be higher? Why or why not?

Q: You own a portfolio that is 25 percent invested in Stock X

You own a portfolio that is 25 percent invested in Stock X , 40 percent in Stock Y , and 35 percent in Stock Z . The expected returns on these three stocks are 11 percent, 17 percent, and 14 percent,...

Q: Looking at the accounting statement of cash flows, what does the

Looking at the accounting statement of cash flows, what does the bottom line number mean? How useful is this number for analyzing a company?

Q: True or false: The most important characteristic in determining the expected

True or false: The most important characteristic in determining the expected return of a well-diversified portfolio is the variances of the individual assets in the portfolio. Explain.