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Q. Drawbacks or Criticism of MM Approach?
Risk Perceptions of personal as well as corporate leverages are different: - It is incorrect to presume that 'personal leverage' is a perfect substitute for 'corporate leverage'. Liability of an investor is incomplete in corporate enterprises whereas the liability of an individual borrower is unlimited as even his personal property is likely to be used for payment to lenders.
Therefore the risk to the individual borrower is higher.
(2) Difference in cost of borrowing by the firm and individuals: - The supposition that firms and individuals can borrow at the same rate of interests doesn't hold good in practice.
(3) Convenience: - The corporate borrowing is further convenient to the investor because the formalities and procedures in borrowing are to be observed by corporate.
(4) Institutional Restrictions: - Institutional restrictions rise in the way of a smooth operation of arbitrage process.
Explain how to resolve a "ranking conflict" between the net present value and the internal rate of return. Why should the conflict be resolved as you explained? Whenever there
Loans from the financial institutions: Financial institutions such as the commercial bank life insurance corporation, industries financial development corporation bank of the
Individual/Borrower Rating This includes rating a borrower to whom a loan/credit facility may be sanctioned.
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Z works for HS Company and has been asked to undertake an assessment of any health and safety issues that might be potential hazards in the department which she manages. Z's respon
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