In Table 14.3 Rajan and Zingales use both book and market values of equity to measure debt
Question:
In Table 14.3 Rajan and Zingales use both book and market values of equity to measure debt ratios. Which measure results in the lower ratio?Why?
Transcribed Image Text:
Debt to Total Capital Book, Adjusted Market, Adjusted Book Market Canada 39% 37% 35% 32% France 48 34 41 28 38 Germany Italy Japan United Kingdom United States 18 23 15 47 39 46 36 53 37 29 17 28 37 16 19 11 23 28 33
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 64% (14 reviews)
In general using market values of equity results in lower debt...View the full answer
Answered By
Nazrin Ziad
I am a post graduate in Zoology with specialization in Entomology.I also have a Bachelor degree in Education.I posess more than 10 years of teaching as well as tutoring experience.I have done a project on histopathological analysis on alcohol treated liver of Albino Mice.
I can deal with every field under Biology from basic to advanced level.I can also guide you for your project works related to biological subjects other than tutoring.You can also seek my help for cracking competitive exams with biology as one of the subjects.
3.30+
2+ Reviews
10+ Question Solved
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Question Posted:
Students also viewed these Corporate Finance questions
-
Rajan and Zingales identified four variables that seemed to explain differences in debt ratios in several countries. What are the four variables?
-
A firm's market values of equity and debt are $750,000 and $250,000, respectively. The before tax cost of debt = 6%; RF = 4%; beta () = 0.8; the market risk premium = 10%; and the tax rate = 20%....
-
Why are ratios useful? What three groups use ratio analysis and for what reasons?
-
A marketing researcher wants to estimate the mean amount spent per year ($) on a web site by membership member shoppers. Suppose a random sample of 150 membership member shoppers who recently made a...
-
When dishes are not properly rinsed after washing, different colors are reflected from their surfaces. Explain.
-
Identify a person at work or at school who is difficult to talk to and arrange an interview in which you practice good reflective listening skills. Ask the person questions about a topic you think...
-
Discuss why some form of theoretical pricing model is required for inventory valuation purposes.
-
Ethics and pricing. Baker, Inc., is preparing to submit a bid for a ball-bearings order. Greg Lazarus, controller of the Bearings Division of Baker, has asked John Decker, the cost analyst to prepare...
-
Manufacturers Southern leased high-tech electronic equipment from Edison Leasing on January 1, 2021. Edison purchased the equipment from International Machines at a cost of $136,768. (FV of $1, PV of...
-
You have five 1.5 V cells. How would you connect all five of them to give an e.m.f. of: a. 7.5 V b. 1.5 V c. 4.5 V?
-
An analysis of the behavior of exchange rates and bond prices around the time of international assistance for countries in balance of payments difficulties suggests that on average prices decline...
-
It is sometimes suggested that since retained earnings provide the bulk of industrys capital needs, the securities markets are largely redundant. Do you agree?
-
Advantages of using standard costs include all of the following except that a. standard costing allows companies to create flexible budgets. b. managers can evaluate the efficiency of production...
-
Malindi limited makes a single product, EX. The standard selling price per unit of product EX, together with the standard cost per unit is detailed as below: Shs Selling price3 200 Cost: Direct...
-
Audience Analysis Practice Assignment Use the following websites (or find your own): Five Reasons to Get a Yearly Checkup Getting a Yearly Checkup Long Covid Mindful Medicine Proposition: you should...
-
Business Communication 1. What is Management Report? Cite an example of it. 2. What is an Operational Report? Cite an example of it. 3. What is Investigative Report? Cite an example of it. 4. What is...
-
Provide an example of a "grand narrative" within the United States. Discuss which voices/groups within the U.S. are amplified or privileged by the example provided? Which voices or groups are...
-
What is the title of the essay about a stratification system? Which type of stratification system does the essay discuss? What evidence of this system does the essay provide? What does the essay say...
-
Consider the NMOS inverter with depletion load in Figure 16.9(b). The transistor parameters are \(V_{T N D O}=0.4 \mathrm{~V}, \quad V_{T N L O}=-0.6 \mathrm{~V}, K_{D}=\) \(100 \mu \mathrm{A} /...
-
What will be the final value of DI after executing the following piece of code? Execute the instructions dependently one after another. CLD MOU CX,OFOH MOU AX.02874H MOU DI,01000H MOU ES, DI SUB...
-
Using the Internet, find the latest data on government revenues and expenditures in India and in the United Kingdom. What differences do you find in terms of the composition of revenues and...
-
True or false a. Financing decisions are less easily reversed than investment decisions. b. Tests have shown that there is almost perfect negative correlation between successive price changes. c. The...
-
Analysis of 60 monthly rates of return on United Futon common stock indicates a beta of 1.45 and an alpha of - .2% per month. A month later, the market is up by 5%, and United Futon is up by 6%. What...
-
True or false a. Analysis by security analysts and investors helps keep markets efficient. b. Psychologists have found that, once people have suffered a loss, they are more relaxed about the...
-
Cyclizar Inc. provided S4,000 of services with the customers promising to pay next week. In the journal entry written, what would go in box d? A) Cash B) Accounts Receivable C) Revenue D) Accounts...
-
ANSWER IN YOU OWN WORDS! Dont forget to provide references. Thank you. 1. Explain the process by which assets are written up (or down) on intercompany asset transfers and why GAAP prohibits the...
-
Question 4 i need answer asap The following information is given for Rise Up Sdn.Bhd: Unit sales price RM15 Variable cost per unit RM7 Total Fixed cost RM55,OOO Required: a) Calculate the...
Study smarter with the SolutionInn App