Questions from Financial Management

Q: If an optimal capital structure exists, what are the reasons why

If an optimal capital structure exists, what are the reasons why too little debt is as undesirable as is too much debt?

Q: What is the operating leverage effect and what causes it? What

What is the operating leverage effect and what causes it? What are the potential benefits and negative consequences of high operating leverage?

Q: What is the financial leverage effect and what causes it? What

What is the financial leverage effect and what causes it? What are the potential benefits and negative consequences of high financial leverage?

Q: Define the following terms that relate to a convertible bond: conversion

Define the following terms that relate to a convertible bond: conversion ratio, conversion value, and straight bond value.

Q: Do you believe an increased common stock cash dividend can send a

Do you believe an increased common stock cash dividend can send a signal to the common stockholders? If so, what signal might it send?

Q: What is the effect of stock (not cash) dividends and

What is the effect of stock (not cash) dividends and stock splits on the market price of common stock? Why do corporations declare stock splits and stock dividends?

Q: What is the matching principle of working capital financing? What are

What is the matching principle of working capital financing? What are the benefits of following this principle?

Q: Describe how society's interests can influence financial managers.

Describe how society's interests can influence financial managers.

Q: Can a company have a default rate on its accounts receivable that

Can a company have a default rate on its accounts receivable that is too low? Explain.

Q: What are compensating balances and why do banks require them from some

What are compensating balances and why do banks require them from some customers? Under what circumstances would banks be most likely to impose compensating balances?