Risk-free rate increases

Assignment Help Other Subject
Reference no: EM133308209

Questions

1. If the risk-free rate increases by 2% and the default risk premium of the company decreases by 2% what is likely to happen to the companies cost of capital, keeping everything else constant?

Assume market value of equity is equal to market value of debt.

Hopur svarmoguleika

Cost of capital will increase by 1%

Cost of capital will decrease by 1%

Cost of capital will be unchanged

Insufficient information

2. Which of the following statements about market price is correct?

Hopur svarmöguleika

Comparing market price and intrinsic value can help you determine whether an asset is over- or undervalued by the market.

All market participants agree on the price and that is the price you can see on the stock exchange.

Market price is always equal to intrinsic value of the company.

Market price is the result of our valuations.

Non of the above.

Reference no: EM133308209

Questions Cloud

What is role of net working capital in projects : What is the role of net working capital in projects? How does net working capital affect a project's cash flows?
Compute the share price : Sennheiser's preferred stockholders require an annual return of 8.00%, compounded quarterly. Compute the share price.
Equilibrium price and quantity for energy drinks : Find the equilibrium price and quantity for energy drinks and draw the graph for the market.
Doug purchased non-registered term-certain annuity : At age 75, Doug Purchased a non-registered term-certain annuity with a 10-year guarantee period.
Risk-free rate increases : If the risk-free rate increases by 2% and the default risk premium of the company decreases by 2%
Benefit of tax saving account program : A benefit of Tax saving account program is that you can withdraw your saving from your TSFA at any time with no penalty,
Factor in control environment : Which of the following is a factor in the control environment?
Real-life application of annuities : Look for a real-life application of annuities. Explain why this is an annuity by identifying if it is a loan or investment, the regular payment or deposit,
Treatment required in financial report : Do you think any treatment required in the financial report for each of the above events or transactions for the year ended 30 June 2021?

Reviews

Write a Review

Other Subject Questions & Answers

  Cross-cultural opportunities and conflicts in canada

Short Paper on Cross-cultural Opportunities and Conflicts in Canada.

  Sociology theory questions

Sociology are very fundamental in nature. Role strain and role constraint speak about the duties and responsibilities of the roles of people in society or in a group. A short theory about Darwin and Moths is also answered.

  A book review on unfaithful angels

This review will help the reader understand the social work profession through different concepts giving the glimpse of why the social work profession might have drifted away from its original purpose of serving the poor.

  Disorder paper: schizophrenia

Schizophrenia does not really have just one single cause. It is a possibility that this disorder could be inherited but not all doctors are sure.

  Individual assignment: two models handout and rubric

Individual Assignment : Two Models Handout and Rubric,    This paper will allow you to understand and evaluate two vastly different organizational models and to effectively communicate their differences.

  Developing strategic intent for toyota

The following report includes the description about the organization, its strategies, industry analysis in which it operates and its position in the industry.

  Gasoline powered passenger vehicles

In this study, we examine how gasoline price volatility and income of the consumers impacts consumer's demand for gasoline.

  An aspect of poverty in canada

Economics thesis undergrad 4th year paper to write. it should be about 22 pages in length, literature review, economic analysis and then data or cost benefit analysis.

  Ngn customer satisfaction qos indicator for 3g services

The paper aims to highlight the global trends in countries and regions where 3G has already been introduced and propose an implementation plan to the telecom operators of developing countries.

  Prepare a power point presentation

Prepare the power point presentation for the case: Santa Fe Independent School District

  Information literacy is important in this environment

Information literacy is critically important in this contemporary environment

  Associative property of multiplication

Write a definition for associative property of multiplication.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd