Quiz Ch 11 – Understanding Macroeconomic Risk Exposure
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
Regarding macro risk exposure, what is accurate?
Regarding macro risk exposure, what is accurate?
Which strategy should the investor employ if an investor seeks to invest in companies with high operating leverage while maintaining a portfolio beta of 1.0?
What action should be taken when a project has the potential for a negative outcome?
When a corporation’s management, armed with superior knowledge of prospective investments, deems a security issue to be underpriced, how might they respond?
What accurately describes an unlevered firm that does NOT pay taxes?
What proportion of debt should a company aim for when the cost of debt is 6%, the cost of equity is 10%, and the corporate tax rate is 21% under MM Proposition II in the absence of taxes and assuming no bankruptcy risk?
What is the implication given a firm’s pro forma statements showing a $5,000 net income, $2,000 in dividends, and a $2,000 external financing requirement?
What element should be used to maintain this balance in the financial plan of a growing company that adheres to a fixed dividend policy and wishes to avoid new shareholders?
How would modifying the credit terms impact the effective annual interest rate?
What characterizes a revolving line of credit?