How much should they be willing to pay for risk reduction

Assignment Help Financial Management

Reference no: EM13917574

1. A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?

a) $450,000 b) $500,000 c) $1,000,000 d) $5,000,000

2. _____________ was passed in 2010 as a response to the Financial Crisis.

a) Bush-Cheney

b) Dodd-Frank

c) Glass-Steagall

d) Gramm-Bailey

3. Many people consider the he failure to save _____________ as the start of the financial crisis.

a) AIG

b) Goldman Sachs

c) Lehman Brothers

d) Merrill Lynch

4. Which statement is FALSE?

a) Debt levels rose the most in low income areas

b) People around the world were saving too much money

c) The Federal Reserve contributed to the housing bubble by keeping interest rates too low

d) The Strong Dollar attracted money from overseas

Reference no: EM13917574

Questions Cloud

What must be the coupon rate on the bonds : Large Industries bonds sell for $1,062.92. The bond life is 10 years, and the yield to maturity is 7.1%. What must be the coupon rate on the bonds? Assume coupons are paid once a year and the face value is $1,000.

Assuming the current market price of the stock reflects : The stock of Nogro Corporation is currently selling for $30 per share. Earnings per share in the coming year are expected to be $6. The company has a policy of paying out 40% of its earnings each year in dividends. Assuming the current market price o..

Semi-annual coupon bond outstanding : The Corner Grocer has a 7-year, 6 percent semi-annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Show mathematically what happens if the market yield suddenly increases to 7 percent. Elaborate in..

What adjustments should you make to your bond portfolio : Inflation has remained low for the past three years but you have come to the conclusion that trend is ending and inflation will increase significantly over the next 18 months. Assume you have reached this conclusion prior to other investors reaching ..

How much should they be willing to pay for risk reduction : A firm has a WACC of 10% and $50,000,000 in assets. They feel that that they can reduce their WACC to 9% by doing a better job of managing risk. How much should they be willing to pay for risk reduction?

At what volume of output would the two locations : At what volume of output would the two locations have the same total cost? For what range of output would location A be superior? For what range would B be superior?

The process of pooling loans into bonds is called : The process of pooling loans into bonds is called ___________. The idea that the failure of one firm can cause other firms to fail is called ___________.

The option pricing model was developed : The Option Pricing Model was developed by ________________. Hedging activities and buying insurance are examples of _______________.

Considering expanding operations to meet growing demand : A corporation is considering expanding operations to meet growing demand. With the capital expansion, the current accounts are expected to change. Management expects cash to increase by $20,000, accounts receivable by $40,000, and inventories by $60,..

User Account

All Pages