What are the primary factors that should be considered

Assignment Help Financial Management

Reference no: EM133674341

Discussion Post

Firm's capital structure is determined by more than just a component cost for each source of capital and is not fixed over time. Rather, the capital structure of a firm is determined by conditions in the domestic and international economies, and it should also reflect changing conditions in the economy. In other words, the relationship between risk and return should be the major consideration in establishing the capital structure of the firm and the value of the firm.

Address one of the following prompts in a brief but thorough manner.

A. What is the relationship between risk and return and how is this reflected in the value of the firm's stock? The cost of debt?
B. What are the primary factors that should be considered when establishing a firm's capital structure?

Reference no: EM133674341

Questions Cloud

What is the role of financial institutions in the economy : What is the role of financial institutions in the economy? What is the difference between stocks and bonds? What is the concept of risk and return in finance?

Create a digital artifact that illustrates common components : Create a digital artifact that illustrates the common components of a Big Data architecture and includes a description for each component.

What will you include in your timeline reconstruction : What will you include in your timeline reconstruction? What legal and ethical aspects should be considered in a digital forensics investigation?

How do changes in credit ratings affect bond valuation : What is the formula for calculating the present value of a bond? How do changes in credit ratings affect a bond's valuation?

What are the primary factors that should be considered : What is the relationship between risk and return? What are the primary factors that should be considered when establishing a firm's capital structure?

Portfolio management process : Follow the steps of a basic Portfolio Management Process and write mom a two-page letter with your recommendations of what she do.

Spot foreign exchange market is in equilibrium : Analyze whether or not the spot foreign exchange market is in equilibrium?

Calculate equivalent annual cost for the project : Calculate the equivalent annual cost for the project. Calculate the financial break-even number of units for the project

What would the dividend yield as a percentage today : Discuss and calculate the cost of new common stock. What would the dividend yield as a percentage today and a year from now if the dividend growth rate is 12%?

User Account

All Pages