Discuss what you know about risk and return issues

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Reference no: EM132914031

1. Discuss what you understand about Finance, why we need finance and how finance becomes essential requirement of every organization and in our daily life of social, political and economic arenas? Furthermore, discuss what financial management means and why it is required in the personal and business arenas. What are major components of financial management and what decisions are made by financial managers?

2. Differentiate profit maximization from wealth maximization? Which one of them comes first and discuss how the managers negotiate the conflicts among them.

3. Discuss what you know about risk and return issues, differentiate systematic risk from unsystematic risk. Furthermore, discuss what good risk and return model should perform and how we can manage the risk-return trade off.

4. Compare and contrast the Capital Asset Pricing Model with that of Arbitrage Pricing Theory. Which model is broad, inclusive and appropriate way of measuring risk and return of assets?

5. Clearly discuss the issues of Long Term financing, justify why we need capital budgeting and discuss the reason why it becomes very critical on doing capital budgeting issues. Compare and contrast Long Term financing with that of short Term financing. Discuss in detail about Investment Banking and lease financing.

6. Does following the residual theory of dividends lead to a stable dividend? Is this approach consistent with dividend relevance? How do you explain the issues of clientele effect in dividend policy? Justify the theories of dividends with the values of the firm. Contrast the basic arguments about dividend policy advanced by MM and by Gordon. How do you relate this with the real world? Explain in detail and support yourself with practical evidence.

7. What is the relation between the expected growth rate of common stock dividends and the dividend payout? What is the rationale behind this relation? If the dividend rate on preferred stock is reset every year to the going market yield on preferred stocks of similar risk, at what price would a share of preferred stock trade?

Reference no: EM132914031

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