Different borrowers have different risks of bankruptcy

Assignment Help Financial Management

Reference no: EM132028939

1. Which of the following statments is correct?

a. to maximize the value of a firm you need to maximize the firm's WACC.

b. A chapter 7 bankruptcy is a legal process for reorganizing a firm.

c. investors cannot use homemade leverage to offset firm leverage.

d. to maximize the value of a firm you need to maxi mize shareholder of wealth by optimizing capital structure and others

2. Different borrowers have different risks of bankruptcy, and bankruptcy is costly to lenders. therefor, lenders charge higher rates to borrowers judged to be more at risk of going bankrupt.

true

false

Reference no: EM132028939

Questions Cloud

Under normal economic conditions : Your cattle farm will generate $0.20 million of profits on sales of $4 million under normal economic conditions and that the degree of operating leverage is 5.

Calculate the profitability required by the shareholders : Calculate the profitability required by the shareholders and the WACC of the company after the change of financial structure.

How much of their first payment goes toward principal : How much of their first payment goes toward principal? After making their first payment, what is the remaining balance?

A put option on atlantis corp stock with an exercise price : A put option on Atlantis Corp. stock with an exercise price of $40 and an expiration date 6 months from now should be worth __________

Different borrowers have different risks of bankruptcy : Different borrowers have different risks of bankruptcy, and bankruptcy is costly to lenders.

What is project NPV : A project has annual cash flows of $3,000 for the next 10 years and then $10,500 each year for the following 10 years. what is the project's NPV?

Some of the non-tax related advantages of leasing : what are some of the non-tax related advantages of leasing?

Discount rate suggest about the project risk : What does the 20% discount rate suggest about the project risk?

According to the static theory of capital structure : According to the static theory of capital structure, a firm borrows up to which one of the following points?

User Account

All Pages