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Explain about the Financial risk
financial risk are presumed to be constant, changing cost of each type of capital, j, over time must be affected only by changes in the supply of and demand for each type of funds, j. Cost of each type of capital to a given firm compared to the cost to another firm (that is the inter firm comparison) can differ due to differences in the degree of business and financial risk associated with each firm because the riskless cost of the given type of funds remains constant. Different business and financial risk premiums are associated. With different levels of business and financial risk. These premiums are a function of business risk, b, and financial risk, f, of a firm. For intra firm (which is time series) comparisons, only differentiating factor is the cost of the type of financing, As business and financial risk are presumed to be constant an example may help to clarify these points.
All other things held constant, how would the market price of a bond be affected if coupon interest payments were made semiannually instead of annually? The majority of bonds i
A simple passive strategy involves building a portfolio and holding it through time. The coupons as well as the proceeds of matured bonds are just reinvested in new iss
The sales manager considers that there will be substantial foreign exchange risk in trading with Werland. Payment is unpaid in Werland francs in three months time. The current ster
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Ken started college at the age of 18 with $63,450 already saved, because 18 years ago his saving account 7.25 per year.
What are the pros and cons of commercial paper relative to bank loans for a company seeking short-term financing? Commercial paper is generally a cheaper source of short-term f
The RBI, on behalf of the government, issues all T-Bills and Government dated securities. Being risk-free securities, they set the benchmark for the interest rate
Clearing and Settlement The Treasury Bills are available in physical form if an investor desires so. The market is mostly dominated by institutional players who have a facility
Along with the fixed capital nearly every Small-Scale industries requires working capital though the extent of working capital requirement differs in different businesses. Working
Specific Cost of Capital When the Cost of every source of capital is individually calculated, it is known as Specific Cost of Capital example Cost of equity, cost of debt, etc
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