Questions from Financial Management


Q: Why is corporate long-term debt riskier than government long-

Why is corporate long-term debt riskier than government long-term debt?

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Q: Why do investors generally consider common stock to be riskier than preferred

Why do investors generally consider common stock to be riskier than preferred stock?

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Q: Should a firm pay cash dividends in a year in which it

Should a firm pay cash dividends in a year in which it raises external common equity?

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Q: What are the advantages to a U.S. firm of

What are the advantages to a U.S. firm of financing its foreign investments with funds raised abroad?

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Q: Discuss the meaning of an optimal capital budget.

Discuss the meaning of an optimal capital budget.

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Q: Evaluate the statement “Depreciation-generated funds have no explicit cost

Evaluate the statement “Depreciation-generated funds have no explicit cost and therefore should be assigned a zero cost in computing a firm’s cost of capital.”

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Q: Describe how to derive the break points in the marginal cost of

Describe how to derive the break points in the marginal cost of capital schedule.

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Q: Discuss the pros and cons of various sources of estimates of future

Discuss the pros and cons of various sources of estimates of future earnings and dividend growth rates for a company.

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Q: What market risk premium should be used when applying the CAPM to

What market risk premium should be used when applying the CAPM to compute the cost of equity capital for a firm if: a. The risk-free rate is the 90-day Treasury bill rate? b. The risk-free rate is t...

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Q: What factors determine the required rate of return for any security?

What factors determine the required rate of return for any security?

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