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FM (Test) > E Rote > Flashcards

E Rote Flashcards

1
Q

What are unsecured bonds likely to require? (yield)

A

A higher yield to maturity than equivalent secured bonds

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2
Q

What do convertible bonds give the borrower the right to?

A

To turn the bind into a predetermined number of ordinary shares

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3
Q

What is a eurobond?

A

A bond that is denominated in a currency which is not native to where bond itself is issued

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4
Q

Who has the rights in a convertible bond (borrower or investor)

A

Investor

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5
Q

Are trade payables unsecured or secured?

A

Typically unsecured

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6
Q

Is ordinary or preference shares riskier?

A

Ordinary

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7
Q

What is meant by a coupon rate for bonds?

A

Annual interest received as a % of nominal value of the bond

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8
Q

What is meant by redemption yield?

A

Return received taking into account capital repayment as well as interest payments

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9
Q

What is meant by interest yield?

A

Annual interest received as a percentage of the ex interest market price of the bond

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10
Q

What is meant by sukuk?

A

A bond in islamic finance where lender owns the underlying asset and shares in the risks and rewards of ownerships

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11
Q

What is meant by mudaraba?

A

Equity in islamic finance where profits are shared according to a pre-agreed contract - dividends are not paid as such

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12
Q

What is meant by murabaha?

A

Trade credit in Islamic finance where a pre-agreed mark-up is agreed in advance for the convenience of paying later

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13
Q

What is meant by ijara?

A

A lease in islamic finance where lessor retains ownership and risk and rewards of ownership of the underlying asset

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14
Q

What does MM model assume in regards to capital markets?

A

Assume perfect capital markets so there is no information content in dividend policy

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15
Q

Assumptions for MM model? (taxes)

A

No taxes or tax preferences

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16
Q

Assumptions for MM model? (transaction)

A

No transaction costs

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17
Q

Why does MM assume no transaction costs?

A

Investors can switch between income and capital gains without cost

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18
Q

What is a residual dividend geared to?

A

Geared to financing investments that will give capital gains

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19
Q

What is meant by manufacturing dividends?

A

Investors selling some shares to realise some capital gains

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20
Q

What can a share repurchase scheme increase ratios?

A

EPS and gearing

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21
Q

What is a bonus issue>

A

When a company offers free additional shares to existing shareholders

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22
Q

What are shareholders entitlied to receive (dividends)

A

To receive a share of any agreed dividends but directors decide on amount and frequency of dividend payments

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23
Q

Are currency futures suitable for trades in small amounts of currency?

A

No, as they are standard contract sizes

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24
Q

Is peer-to-peer lending equity or debt finance?

A

Debt finance

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25
Q

Is corwdfunding equity or debt finance?

A

Equity finance

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26
Q

Is peer-to-peer lending available to startup companies?

A

No, only to investors with an established trading history

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27
Q

Why do SMEs have a funding gap?

A

Due to them being seen as a higher risk investment than a larger company

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28
Q

What do founding shareholders of an SME often have to sacrifice?

A

Limited liability to obtain bank finance

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29
Q

Are medium-term or longer-term loans for SMEs harder to obtain?

A

Medium-term loans due to mismatching of the maturity of assets and liabilities

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30
Q

What is meant by a funding gap?

A

Shortfall in capital needed to fund ongoing operations

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31
Q

What is business angel financing?

A

Private individuals or group of individuals can invest directly into a small business

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32
Q

What does supply chain finance (SCF) allow?

A

A buyer to extend the time in which it settles its accounts payable

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33
Q

What does supply chain finance allow for a lower interest rate?

A

Allows an SME to raise finance at a lower interest rate than would normally be available for it

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34
Q

What is meant by systematic risk?

A

Residual risk associated with investing in a well-diversified portfolio

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35
Q

What is total risk?

A

Risk associated with investing in equity

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36
Q

Issue with an increase in cost of equity?

A

Leads to a fall in share price

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37
Q

What is risk-return trade-off?

A

Investors faced with increased risk will expect increased return as compensation

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38
Q

Is cost ode bt usually lower than the cost of preference shares?

A

YES

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39
Q

Why should capital structure remain unchanged for the duration of a project? (if current WACC used as appraisal)

A

As this affects the WACC

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40
Q

What is the business risk of the project the same as? (if current WACC used as appraisal)

A

The current business operations

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41
Q

Size of project? (if current WACC used as appraisal)

A

It is relatively small in size

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42
Q

What does higher gearing increase?

A

The cost of equity

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43
Q

Are interest payments tax deductible?

A

Yes

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44
Q

What does MM assume with financial risk?

A

MM assumes financial risk is consistently proportionate to gearing across all levels

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45
Q

What does the asset beta only effect?

A

The business risk

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46
Q

Which will be lower, asset beta or equity beta?

A

Asset beta

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47
Q

What is the difference between an asset beta and an equity beta?

A

The impact of financial risk

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48
Q

When is financial risk higher (debt beta)

A

If a debt beta is assumed to be zero

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49
Q

What does an asset beta only reflect?

A

Business risk

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50
Q

What does an equity beta reflect?

A

Both business and financial risk

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51
Q

Does tax being zero mean asset beta is greater than an equity beta?

A

No

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52
Q

Do asset and equity beta contain the same business risk?

A

YES

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53
Q

Do bonus issues raise cash?

A

No

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54
Q

Why is dividend decision irrelevant in M&M?

A

As shareholders would be happy with capital gains or dividends

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55
Q

What can a share repurchase scheme increase?

A

Both EPS and gearing

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56
Q

Issue with offering new shares for tender?

A

May mean that not enough funding is raised from the share issue

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57
Q

What should an offer for tender ensure?

A

All shares on offer are taken up

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58
Q

Share price and an increase in cost of equity?

A

Leads to a fall in share price

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59
Q

What is lower, the cost of debt or cost of preference shares?

A

Cost of debt as risk is lower

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60
Q

Profits and a decrease in company’s operating gearing ratio?

A

Company has profits which are less sensitive to changes in sales volume

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61
Q

Fixed costs and a decrease in gearing ratio?

A

Implies a lower proportion of fixed costs

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62
Q

WACC and traditional theory of gearing?

A

There must exist a minimum WACC

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63
Q

What happens when there’s a scrip issue with perfect information?

A

Decreases market price and EPS, as there is no misinterpretation by investors

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64
Q

A company incorporates increasing amounts of debt finance into its capital structure, while leaving its operating risk unchanged. Assuming a perfect capital market, effect on company’s cost of capital and total market value (cost of equity)?

A

Increases

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65
Q

A company incorporates increasing amounts of debt finance into its capital structure, while leaving its operating risk unchanged. Assuming a perfect capital market, effect on company’s cost of capital and total market value (WACC)?

A

Decreases as there’s increased gearing

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66
Q

A company incorporates increasing amounts of debt finance into its capital structure, while leaving its operating risk unchanged. Assuming a perfect capital market, effect on company’s cost of capital and total market value (total market value)?

A

Increases due to market value

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67
Q

What is financial risk depedent on?

A

Debt/equity (gearing) ratio

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68
Q

When there’s a lower the value of debt in the ratio?

A

Financial risk is lower

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69
Q

What is operating risk dependent on?

A

Ratio of variable costs to fixed costs

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70
Q

When the lower of proportion of variable costs and higher the proportion of fixed costs?

A

The higher the operating risk

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71
Q

Changes due to sales effect on fixed and variable costs?

A

Fixed: None
Variable: Fluctuations

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72
Q

What is risk that cannot be diversified away?

A

Systematic risk

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73
Q

What is risk that increases as a company gears up?

A

Financial risk

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74
Q

An all equity company issues some irredeemable loan notes to finance a project that hasthe same risk as existing projects. The company operates in a tax-free environment underconditions of perfect capital markets

What happens with cost of equity?

A

Increases

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75
Q

An all equity company issues some irredeemable loan notes to finance a project that hasthe same risk as existing projects. The company operates in a tax-free environment underconditions of perfect capital markets

What happens with WACC?

A

No change

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76
Q

What is most likely to result in a company’s financial gearing being high? (tax)

A

High tax rates

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77
Q

What is most likely to result in a company’s financial gearing being high? (intangible)

A

Intangible assets being a low proportion of total assets

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78
Q

How do oridinary secured loan notes compare to convertible secured loan notes?

A

Less expensive because if their equity component as investors are willing to accept a lower coupon rate on the debt

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79
Q

How does M&M determine the relevance of dividend policy?

A

Value of shareholders’ equity is determined solely by the firm’s investment selection criteria (as it’s a perfect market)

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80
Q

Gordon growth model and relevance on dividend policy?

A

Increase in retentions results in a higher growth rate

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81
Q

If a company that currently pays its workforce on a piece rate system were to automate itsproduction line, which of the following responses would it expect of operating gearing?

A

Increase as fixed cost increases but variable cost decreases

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82
Q

What does ROCE measure?

A

How efficiently the company is using the funds available

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83
Q

What does interest cover measure?

A

A company’s financial risk

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84
Q

Are preference shares a form of equity/debt capital?

A

Equity capital

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85
Q

Are preference shares more risky than ordinary shares from a company point of view?

A

Yes, as they carry out a requirement to pay dividends

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86
Q

Are preference shares more risky than ordinary shares from an investor point of view?

A

No, but higher risk than debt

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87
Q

What is meant by interest yield?

A

The interest or coupon rate expressed as a percentage of themarket price and this is a measure of return on investment for the debt holder

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88
Q

What does total shareholder return ratio measure?

A

The returns to the investor by taking accountof dividend income and capital growth

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89
Q

What does dividend per share ratio measure?

A

Helps individual shareholders see how much of the overall dividend payout they are entitled to

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90
Q

What does the dividend cover ratio measure?

A

How many times the company’s earnings could pay the dividend

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91
Q

Long-term leases (agreement)

A

The lease agreement cannot be cancelled

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92
Q

Long-term leases (lessee)

A

Lessee is responsible for repairs and maintenance

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93
Q

Long-term leases (lessor)

A

Lessor does not retain the risks or rewards of ownership

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94
Q

Long-term leases (quantity)

A

Usually one lease that covers the majority of the useful life of the asset, not many

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95
Q

In relation to an irredeemable security paying a fixed rate of interest, what happens when risk rises?

A

The market value of the security will fall to ensure that investors receivean increased yield

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96
Q

What is meant by maturity gap?

A

Using its non-current assets an SME may find it easierto secure long-term finance when it may actually need short- or medium-term finance

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97
Q

What is meant by a funding gap?

A

The difference between the finance required to operate an SME and the amount obtained

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98
Q

What is an advantage to existing shareholders of listing the company on a major stock market?

A

Shares become more marketable

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99
Q

What is an introduction defined as?

A

The listing of existing shares without any new finance being raised

100
Q

Who is offered a rights issue first?

A

Existing shareholders

101
Q

What does a rights issue spread?

A

A company’s value over an increased number of shares

102
Q

What is the main purpose of a rights issue?

A

To raise finance

103
Q

How are shares issued in a bonus issue?

A

At nominal value

104
Q

Do bonus shares carry voting rights?

A

Yes

105
Q

What is crowdfunding?

A

The practice of funding a project or business venture by raising monetary contributions from a large number of people, typically using the internet

106
Q

Why are SMEs seen as a igher trading risk?

A

Due to a lack of trading history as well as fewer assets to provide security

107
Q

What do SMEs often experience?

A

A funding gap

108
Q

What increases the funding gap problems for SMEs?

A

A lack of suitable, sufficient, non-current assets

109
Q

How is the value of a company is determined in dividend irrelevance theory?

A

Solely by the earnings of its investment decisions

110
Q

How are transaction costs incurred in dividend irrelevance theory?

A

In selling shares

111
Q

Shareholders in bird-in-the-hand theory?

A

Shareholders may prefer a current dividend to future capital gains (or deferred dividends) because the future is more uncertain

112
Q

Does a bonus issue raise any cash?

A

No

113
Q

What are good methods to raise equity finance for a listed company?

A

Rights issue
Private placing

114
Q

What is the advantage of financing using long-term debt?

A

The reduction in profit before tax. Interest payments on debt are tax deductible, creating a tax shield for the company

115
Q

When issuing new loan notes, what would be the primary reason for a debt covenant limiting the company’s future level of debt?

A

To reduce the annual interest rate

116
Q

Why do ordinary shares decrease the debt to equity ratio?

A

They increase equity while having no effect on debt

117
Q

Do ordinary shares commit company to a fixed dividend?

A

No

118
Q

Do ordinary shares need to be redeemed?

A

No

119
Q

Do both debt and equity holders have an ownership interest in the company?

A

Equity does, debt no

120
Q

Payments in debt obligations?

A

A periodic interest payment

121
Q

Payments in equity securities?

A

Pay income to their holders when dividends are proposed at the discretion of the board of directors

122
Q

What do variable interest rate loan notes automatically adjust?

A

Their interest payment in line with an agreed market benchmark

123
Q

Which of the following types of loan note is most likely to maintain a constant market value?

A

Variable interest rate

124
Q

What is a warrant?

A

Share options attached to a debt issue in order to make the debt more attractive to potential investors

125
Q

Is selling a sales invoice to a customer’s bank for immediate payment an example of SCF?

A

Yes

126
Q

What is P2P lending?

A

A method of debt financing that enables individuals to lend money to other individuals or small businesses without the use of an official financial institution as an intermediary

127
Q

What are other terms of P2P lending?

A

Can be referred to as “microfinance” or “debt-based crowdfunding”

128
Q

Benefit to selling a sales invoice to a customer’s bank for immediate payment?

A

The customer’s bank would only deduct a small fee when buying the invoice.

129
Q

Allows a small company to take advantage of a large customer’s high credit rating relates to which source of finance?

A

Supply chain finance

130
Q

Converts illiquid assets into liquid assets relates to which source of finance?

A

Securitisation

131
Q

Particularly appropriate for early stage “seed” finance relates to which source of finance?

A

Crowdfunding

132
Q

Payment by installments relates to which source of finance?

A

Ijara

133
Q

What is a participating preference share?

A

Gives the holder the right to receive an additional dividend (if certain conditions are met) in addition to a fixed percentage of the share’s nominal value

134
Q

What elements are needed to estimate the cost of equity using the dividend growth model? (market)

A

Current market price per share

135
Q

What elements are needed to estimate the cost of equity using the dividend growth model? (dividend)

A

Current dividend per share

136
Q

What elements are needed to estimate the cost of equity using the dividend growth model? (growth rate)

A

Expected growth rate in dividend per share

137
Q

What usually determines the optimal capital structure for an organisation?

A

Lowest WACC as PV of company’s future operating cash flows is maximised, thereby maximising the value of company

138
Q

What does any increase in financial gearing create for shareholders?

A

An additional financial risk, thereby pushing up the cost of equity

139
Q

What does pecknig order theory state for managers?

A

Managers prefer to use internal equity rather than issue external finance

140
Q

What does MM show when gearing rises?

A

Increase in the cost of equity (due to financial risk) is perfectly offset by the increased use of relatively cheap debt, leaving the WACC unchanged.

141
Q

Which capital structure theory suggests that the weighted average cost of capital (WACC) will initially decrease, reach a minimum and then increase?

A

Traditional view of capital structure

142
Q

What does a company’s asset beta (ungeared beta) measure?

A

The underlying risk of the company’s operations

143
Q

Does volatility of operating profit measure business risk?

A

Yes

144
Q

Does equity beta measure business risk?

A

No

145
Q

Does volatility of net income measure business risk?

A

No

146
Q

Does CAPM make assumption on a perfect market?

A

Yes

147
Q

Does CAPM make assumption on dividend growth?

A

No

148
Q

Does CAPM make assumption on linear relationship between risk and required return?

A

Yes

149
Q

Effect of bonus issue on EPS?

A

Decreases as there is a larger number of shares

150
Q

Dividends and clientele theory?

A

A company should maintain a stable dividend policy or risk losing investors

151
Q

Dividends and bird-in-the-hand theory?

A

Shareholders prefer higher dividends and lower potential capital gains because a dividend today is without risk whereas future share price growth is uncertain

152
Q

Dividends and dividend irrelevance theory?

A

The pattern of dividends does not affect shareholder wealth

153
Q

In order to invest, a venture capitalist would normally expect?

A

Board representation

154
Q

What do venture capitalists usually want?

A

They usually want 25% to 49% of the equity, a dividend policy that promotes growth and an exit route.

155
Q

What is the minimum amount for an IPO?

A

A minimum of £700000

156
Q

is a business angel available for an SME?

A

No

157
Q

is crowdfunding available for an SME?

A

No

158
Q

Are government grants available for an SME?

A

No

159
Q

What is an advantage of convertible debt?

A

The lower required interest rate due to the attraction of the option of conversion to equity

160
Q

Rollover risk and short-term financing?

A

Higher rollover risk

161
Q

Cost and long-term financing?

A

High cost

162
Q

Why does long-term financing have a higher cost?

A

As long-term investors require higher compensation for deferring their liquidity.

163
Q

What is the coupon rate for a loan note?

A

The coupon rate gives the annual interest based on the nominal value of the loan note

164
Q

Debt/equity on security over company assets?

A

Debt may require security over company assets. Equity isn’t

165
Q

What is an acknowledgement of debt to be paid on a stated date?

A

Bill of exchange

166
Q

How can bill of exchange be held?

A

To maturity or discounted with a bank

167
Q

Which source of finance usually has lowest cost to the company?

A.Bank loan
B.Loan notes
C.Preference shares
D.Ordinary shares

A

Loan notes

168
Q

What further reduces the risk of loan note financing?

A

The company issuing loan notes receives a tax deduction for interest paid

169
Q

Effect of an increase in the corporate income tax rate?

A

Might cause a firm to increase the debt in its financial structure because interest is tax deductible, while dividends are not tax deductible

170
Q

Are dividends tax deductible?

A

No

171
Q

Is interest tax deductible?

A

Yes

172
Q

How can unsystematic risk be eliminated?

A

By investors building a diversified portfolio

173
Q

Traditional capital structure theory (cost of equity)

A

Cost of equity is higher when there is a high proprotion of debt capital

174
Q

Traditional capital structure theory (WACC)

A

Point at which WACC is minimised

175
Q

What is the optimal capital structure made up of?

A

Almost entirely of debt

176
Q

What may debt holders do about market imperfections?

A

May impose restrictive covenants in loan agreements

177
Q

A company’s gearing creates what in market imperfections?

A

Creates a high risk of bankruptcy as the WACC will be higher

178
Q

DGM assumes what for shareholders?

A

Have the same required rate of return

179
Q

DGM assumes a constant share price?

A

No

180
Q

Does equity finance represent cash?

A

No

181
Q

Are preference shares a source of equity capital?

A

No

182
Q

Are retained earnings equity or debt?

A

Equity capital

183
Q

What does Mudarana involve?

A

An investing partner and a managing or working partner

184
Q

What is Murabaha similar to?

A

Trade credit

185
Q

Who do leasing companies pass the obligation back to?

A

The lessee as everything is negotiable

186
Q

If the PV of leasing is cheaper than the PV of purchasing (NPV)

A

A project NPV will increase through the use of a lease as opposed to purchasing an asset, so could potentially rise from negative to positive

187
Q

Why is the existence of a lease will represent extra risk for shareholders that may be perceived by them?

A

Due to legal commitments for cash payments that come with the lease

188
Q

What would be the effect on the TERP value if the new shares were offered at a 20%discount level whilst raising the same total amount of finance?

A

The TERP would fall

189
Q

What is shareholder more likely to accept if the discount on a rights issue gets bigger?

A

To accept the rights offer

190
Q

What is the worst thing shareholders could do in relation to a rights issue as far as shareholder wealth is concerned?

A

Save their investment and do nothing

191
Q

What action shareholders could do that results in the least dilution of control for existing shareholders?

A

Accept the rights offer without negotiation

192
Q

Assuming the business wants to retain control in the hands of the existingshareholders, how should it seek to raise the new finance?

A

issue new debt

193
Q

What is meant by the tax shield?

A

The amount of tax saved due to the payment of interest on debt

194
Q

What happens to tax shield if the higher the value of interest paid?

A

Becomes larger

195
Q

What is the main driver for risk premium?

A

Systematic risk

196
Q

What is meant by the signalling effect?

A

Where changes in dividend patterns can affect the investors’ view of the business

197
Q

What is meant by dividend irrelevancy theory?

A

States that shareholders wish to increase their wealth but are indifferent as to whether it comes from dividends received or through a rise in the share price.

198
Q

What does dividend dependency suggest?

A

Investors have invested because of the currentpattern of dividends and a change in that pattern will upset that and negate theirreasons for investing

199
Q

How to resolve company liquidity issues?

A

The company should only pay out what it canafford or offer a non-cash alternative instead

200
Q

What does a scrip issue give?

A

More shares to shareholders but since the overall market value isnot affected then the share price falls

201
Q

Example of systematic risk (recessionary)

A

Recessionary pressures in the country in which the bank operates

202
Q

Example of systematic risk (election)

A

A change in government after a general election

203
Q

What is meant by a beta value of 1?

A

The investment has the same level of systematic risk as the market

204
Q

Why is having fixed costs in a cost structure risky?

A

Since they have to be paid and are oftenunavoidable in the short run if the business starts to turn downwards

205
Q

What do more fixed costs mean for profitability?

A

More volatility in profits

206
Q

How do equity holders respond to the increased risk when a company includes more debtin its capital structure?

A

By increasing the return they demand from the company

207
Q

What happens to WACC in M&M no tax?

A

It does not change

208
Q

What happens to WACC in M&M with corporation tax introduced?

A

WACC brought down as gearing increased

209
Q

What is the traditional theory of gearing on how modest amounts of debt are treated?

A

Amounts of debt often went unnoticed by shareholders and this lack of response (in the form of increased demands for higher return) meant the WACC fell

210
Q

What do shareholders given M&M assumptions do with risk inherent of extra debt?

A

Compensate themselves by a commensurate increase in required return to leave the company WACC unaltered and withoutany inherent gain

211
Q

What does the rising tail represent?

A

An increased risk to debt holders

212
Q

What does tax exhaustion increase?

A

The cost of borrowing at high levels of gearing

213
Q

Do banks lend to high risk businesses?

A

Generally no

214
Q

What does CAPM assume?

A

All shareholders of a company have thesame required rate of return

215
Q

Dividend growth model assumption (share price)

A

A constant share price and a constant dividend growth for company

216
Q

Dividend growth model assumption (interim dividend)

A

That the company’s interim dividend is equal to the final dividend

217
Q

Is cutting dividend debt or equity finance?

A

Equity finance

218
Q

Preference shares debt or equity finance?

A

Debt

219
Q

What does traditional capital structure theory state for WACC?

A

It is minimised

220
Q

What does traditional capital structure theory state for cost of equity?

A

Will be higher when there is a high proportion of debt capital

221
Q

M&M model with no tax treat value of company?

A

The value of the company remains unchanged with increased gearing

222
Q

M&M model with no tax recognise structure?

A

There is no optimal capital structure

223
Q

Optimal capital structure with M&M with tax model?

A

Optimal capital structure is made up almost entirely of debt

224
Q

Debt holders and market imperfections?

A

Debt-holders may impose restrictive covenants in loan agreements

225
Q

Company’s gearing and market imperfections?

A

When a company’s gearing creates a high risk of bankruptcy the WACC will be higher

226
Q

When does tax exhaustion occur?

A

When there is a high proportion of debt rather than equity capital

227
Q

Agency costs, tax exhaustion and bankruptcy risk discourage what? (gearing)

A

Very high gearing levels

228
Q

What is meant by a placement?

A

A sale of shares to new investors

229
Q

What does pecking order theory state?

A

Managers prefer to use internal finance (i.e. retained earnings) rather than external finance

230
Q

What if external finance is required in pecking order theory?

A

Debt issues are preferable to share issues

231
Q

What is meant by financial disintermediation?

A

Borrowing directly from investors rather than through a financial intermediary such as a bank

232
Q

Debt secured vs unsecured debt (cost)

A

Tend to have a lower cost than unsecured debt

233
Q

What does the redemption price influence?

A

Influences the dollar market value of a loan note rather than the cost of debt

234
Q

Why does a longer period to redemption tends to increase the cost?

A

A normal yield curve is upward sloping

235
Q

Who are loan notes a liability for?

A

The issuer

236
Q

Who are loan notes an asset for?

A

The buyer

237
Q

What happens to the market value of a fixed interest loan note if the general level of interest rates in the economy rises?

A

The market value of the loan note falls as it reduces PV of a loan note’s future cash flows

238
Q

What does the dividend growth model assume?

A

All shareholders of Tulip Co have the same required rate of return

239
Q

What does Mudaraba involve?

A

An investing partner and a managing or working partner

240
Q

When are convertible loans repaid in a creditors’ hierarchy on liquidation?

A

First, then followed by preference shares and ordinary shares

241
Q

What risk does an asset beta only measure?

A

Business risk

242
Q

When assuming the beta of debt is zero?

A

It will understate business risk when ungearing an equity beta to find an asset beta.

243
Q

What is true with traditional capital structure theory (cost of equity)

A

The cost of equity is higher when there is a high proportion of debt capital

244
Q

What is true with traditional capital structure theory (WACC)

A

There is a point which WACC is minimised

245
Q

Optimal capital structure with M&M with-tax model?

A

Made up almost entirely of debt

FM (Test) (8 decks)

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