Reference no: EM131035003
1. According to Modigliani and Miller (1961), dividend policy is irrelevant in perfect capital markets. Discuss and present an example which gives support to this argument.
2. 2.1 Describe and discuss the main criteria used by ratings agencies such as Moody's and Standard and Poor's in order to construct credit ratings.
2.2 Typically, ratings are evaluated in a static order probit setting. Explain the shortcomings of this method and suggest an alternative way of modelling ratings.
3. According to Fazzari, Hubbard, and Petersen (1988), it is the most financially constrainedfirms which display the highest sensitivity of investment to cash flow. According to Kaplan andZingales (1997), it is the financially healthiest firms whose investment is most sensitive tofinancial variables. Explain the arguments of the above mentioned studies and critically evaluate whether these two apparently contradictory findings can be reconciled.
4. a. Present the motives for mergers and the different types of takeovers. Discuss the distinction between friendly and hostile takeovers. Further, describe the defense tactics and the ways in which target managers resist takeovers.
b. What is the process of a hostile takeover? Present a relevant example.
5. Can investment cash-flow sensitivities be considered as appropriate indicatorsof the level of financing constraints faced by firms?
6. Describe and compare the empirical performance of banking relationships in assessing theeffects of credit on firms' employment decisions.
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Determine the largest angle and the minimum coefficient
: determine the largest angle and the minimum coefficient of static friction at A so that the roller remains self-locking, regardless of the magnitude of force P applied to the belt. Neglect the weight of the roller and neglect friction between the ..
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Find the bond price today
: Find the bond's price today and 6 months from now after the next coupon is paid. (Round your answers to 2 decimal places. Current price ? Price after six months?
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Two month lead time from initiation to receipt of order
: Annual demand for number 2 pencil at the campus store is normally distributed with mean 1000 and standard deviation 250. The store purchases the pencils for 6 cents each and sells them for 20 cents each. There is a two month lead time from the initia..
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List the possible outcomes of a default on a corporate bond
: List the possible outcomes of a default on a corporate bond. (ii) Describe how the Jarrow-Lando-Turnbull (J-L-T) credit risk model is an example of a "reduced form model".
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Empirical performance of banking relationships
: Describe and compare the empirical performance of banking relationships in assessing theeffects of credit on firms' employment decisions.
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Increasingly dominant relative to legislatures
: Explain why executives seem to be increasingly dominant relative to legislatures. Do you believe this situation should be altered? How might the power of the executive be limited? Should the legislature or another political actor (who?) be employed t..
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Use game theory to analyze how an oligopolist selects
: Suppose we want to use game theory to analyze how an oligopolist selects its optimal price. The cells of the payoff matrix show the profit that each producer can expect to earn by pursuing a single strategy.
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Which is compound sentence and includes biased language
: Which of the following is a compound sentence? Which of the following includes biased language?
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Capitalize on international opportunities
: a. Explain whySkye may be able to effectively capitalize on international opportunities such as the Greek island tours. b. Skye is privately owned by owners who reside in the United States and work in the main office. Explain possible agency proble..
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