Lecture 1 Flashcards
1
Q
If MM proposition violated, what opportunity is there?
A
Arbitrage
2
Q
NPV
A
- initial investment + cf/cost of capital
3
Q
Equity PV (give 2 formulas)
A
cash flow / cost of capital or initial cost + NPV
4
Q
When calculating shareholders return, to find initial cash holdings you must have (for Unlevered equity)…
A
PV of Equity
5
Q
What does leverage increase the risk of?
A
Unlevered equity, just equity
6
Q
ER (unlevered equity)
A
cash flow/npv - 1
7
Q
Debt PV
A
Debt face value / risk free rate
8
Q
NPV is the same as ..
A
MV
9
Q
Share repurchase
A
Shares outstanding (debt)/share price
10
Q
Share Issuance
A
debt outstanding shares / share price
11
Q
Value per share
A
E (MV) / remaining shares
