5. WAAC in Special Cases Flashcards
1
Q
When can we estimate a company’s WAAC
A
When the company is public
When the company has a fairly focused business
When the company’s leverage is close to its target leverage
2
Q
Modigliani-Miller
A
In perfect financial markets, as leverage increases the cost of equity increases so that the WAAC remains constant
3
Q
negative ß
A
A negative ß means that an investement tends to increase in price when the general market price fall and vice verca
4
Q
What is an opportunity cost
A
The loss of another alternative once one alternative is chosen
5
Q
Can you take listed firms to calculate Ratios ?
A
No
6
Q
Beta Unlevered has another name
A
Assets Beta
7
Q
A
