What is financial leverage

Assignment Help Finance Basics

Reference no: EM13305344

1. If you consider the debt tax shield, all the firms should have as much debt as they can, why then do we find that firms have not high levels of debt?

2. Is it true that the debt to equity ratio has no effect in the riskiness of the stock? (hint, look at the Hamada equation)

3. What is operating leverage and why would firms use it?

4. What is financial leverage?, what is its effect on the ROE and ROIC of a firm?

5. Is it true that both financial and operating leverage increase the risk of the firm's cash flow?

Reference no: EM13305344

Questions Cloud

Calculate the change in the magnetic field : a magnetic field is perpendicular to .04 by .06 m a rectangular coil of wire that has one hundred turns in a time of .05s, Calculate the change in the magnetic field

Estimate the intensity of sound : Sound 1 has an intensity of 35.0 W/m^2. Sound 2 has an intensity level that is 2.7 dB greater than the intensity level of sound 1

All pairs of homologous chromosomes lined up : If all pairs of homologous chromosomes lined up non-randomly along the metaphase plate in meiosis

Ellipse construction via foci method : Ask question ellipse construction via foci method

What is financial leverage : If you consider the debt tax shield, all the firms should have as much debt as they can, why then do we find that firms have not high levels of debt?

What is the expected ear of the 60000 equity investment : Now suppose you have only 60000 you can invest, but you can borrow the other 40000 needed to make the risky investment given above. The loan for the 40000 will be a 7.8% APR installment loan, with monthly payments what is the expected EAR of the 6..

What do you think richard heard actually does : Summarise the job of the operations director. What are the main issues/problems he faces in managing the airport and what do you think Richard Heard actually does each day (how does he spend his time)?

The characteristics of each good : Analyze the characteristics of each of these goods. Focus on the characteristics that define each good as "public" or "private." Based on the characteristics of each good, argue whether the price elasticity of each of these goods would be relativ..

What rate of growth must be expected for sidman : Sidman's products' stock is currently selling for $60 per share. The firm is expected to earn $5.40 per share this year and to pay a year-end dividend of $3.60.

User Account

All Pages