River Cruises (see Section 16.1) is all-equity-financed with 100,000 shares. It now proposes to issue $250,000 of
Question:
a. Borrow $250 on her own account and use the cash to buy additional River Cruises' shares.
b. Raise $250 by selling River Cruises' shares and use the cash to buy the company's debt.
c. Keep her current holding of River Cruises' shares and borrow $250 to invest in the company's bond issue.
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...
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b By issuing debt the company has created financial lever...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-1259722615
9th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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