Questions from Corporate Finance

Q: Some individuals are eager to spend income before it arrives; others

Some individuals are eager to spend income before it arrives; others want to postpone consumption. Give some examples of intermediaries that provide services to these individuals.

Q: Construct a timeline of the important events in the financial crisis that

Construct a timeline of the important events in the financial crisis that started in the summer of 2007. When do you think the crisis ended? You will probably want to review some of the entries under...

Q: We mention several causes of the financial crisis. What other causes

We mention several causes of the financial crisis. What other causes can you identify? You will probably want to review some of the entries under Further Reading before you answer.

Q: True or false? a. In the United States,

True or false? a. In the United States, most common shares are owned by individual investors. b. An insurance company is a financial intermediary. c. Investments in partnerships cannot be publicly tra...

Q: True or false? a. Net stock issues by U

True or false? a. Net stock issues by U.S. nonfinancial corporations in most years are small but positive. b. Most capital investment by U.S. companies is funded by retained earnings and reinvested de...

Q: Look back to the cash flows for projects F and G in

Look back to the cash flows for projects F and G in Section 5-3. The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 8% on aver...

Q: True or false? a. Banks are huge investors in

True or false? a. Banks are huge investors in corporate equity. b. Insurance companies are huge investors in corporate debt. c. Rather than investing directly in corporate equities, most households pr...

Q: What do we mean when we say that stockholders have control rights

What do we mean when we say that stockholders have control rights and residual cash flow rights? How in practice do they exercise their control rights?

Q: Saga City has a declassified board with nine directors. a

Saga City has a declassified board with nine directors. a. How many directors come up for election each year? b. Would Saga be more or less vulnerable to a hostile takeover if it had a classified boar...

Q: Suppose that East Corporation has issued voting and nonvoting stock. Investors

Suppose that East Corporation has issued voting and nonvoting stock. Investors hope that holders of the voting stock will use their power to vote out the company’s incompetent management. Would you ex...