Questions from Financial Markets


Q: What is a firm’s capital structure?

What is a firm’s capital structure?

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Q: Describe two methods for estimating the cost of retained earnings.

Describe two methods for estimating the cost of retained earnings.

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Q: How does the cost of new common stock differ from the cost

How does the cost of new common stock differ from the cost of retained earnings?

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Q: What is the weighted average cost of capital? Describe how it

What is the weighted average cost of capital? Describe how it is calculated.

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Q: Should book value weights or market value weights be used to evaluate

Should book value weights or market value weights be used to evaluate a firm’s current capital structure weights? Why?

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Q: The management of Albar Incorporate has decided to increase the firm’s use

The management of Albar Incorporate has decided to increase the firm’s use of debt form 30 percent to 45 percent of assets. How will this affect its internal growth rate in the future? Its sustainable...

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Q: A booming economy creates an unexpectedly high sales growth rate for a

A booming economy creates an unexpectedly high sales growth rate for a firm with a low internal growth rate. How can the firm respond to this unplanned sales increase?

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Q: How does management’s strategies toward corporate growth and dividends affect its capital

How does management’s strategies toward corporate growth and dividends affect its capital structure policy?

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Q: What is EBIT/eps analysis? What information does it provide

What is EBIT/eps analysis? What information does it provide managers?

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Q: Describe the term “indifference level” in conjunction with EBIT/

Describe the term “indifference level” in conjunction with EBIT/eps analysis.

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