All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Hire a Tutor
AI Study Help New

Search
Sign In
Register

study help
business
corporate financial management

Questions and Answers of Corporate Financial Management

Explain the necessary conditions for the standard deviation on a portfolio to be zero.
A risk-averse investor currently holds lowrisk shares in one company only. In what circumstances would it be wise to split the fund by purchasing shares in a high-risk and high-return share?
‘The objective of portfolio investment is to minimise risk.’ Do you agree?
Why is the standard deviation on a portfolio not a weighted average of the standard deviations of the constituent securities?
Outline the difference between systematic and unsystematic risk.
State the equation for the Security Market Line.
What problems are caused to the usefulness of the CAPM if betas are not stable over time?
What influences the beta level for a particular share?
List the theoretical and practical problems of the CAPM.
In 2007 and 2008 the return on UK shares was less than the return on UK Government bonds. Why don’t we take the most recent returns for rm – rf in the CAPM rather than the long-term historical
What is the holding-period return for a share which cost £2.50, was held for a year and then sold for £3.20, and which paid a dividend at the end of the holding period of 10p?
Calculate the percentage holding-period return for a share that is held for three months and sold for £5. The purchase price was £4.80 and no dividend is payable.
Shares in Whitchat plc can be purchased today for £1.20. The expected dividend in one year is 5p. This is expected to be followed by annual dividends of 6p and 7p respectively in the following two
Company X has a beta value of 1.3, the risk-free rate of return is 8 per cent and the historical risk premium for shares over the risk-free rate of return has been 5 per cent. Calculate the return
The risk-free return is 9 per cent, Company J has a beta of 1.5 and an expected return of 20 per cent. Calculate the risk premium for the share index over the risk-free rate assuming J is on the
What is the most important source of long-term finance for companies generally?
Distinguish between authorised and issued share capital.
Why has it been necessary to have more share exchanges than simply the Main Market of the London Stock Exchange in the UK?
Why is a nominated adviser appointed to a firm wishing to join AIM?
Why might you be more cautious about investing in a company listed on PLUS than a company on the Main Market of the London Stock Exchange?
Why does the United Kingdom Listing Authority impose stringent rules on companies floating on the Official List?
Outline the contents of a prospectus in a new issue on the Main Market of the London Stock Exchange.
How might the working lives of directors change as a result of their company gaining a quotation?
What does a sponsor have to do to help a company float?
What are, and why do the UK authorities insist upon, pre-emption rights?
Why are placings subject to strict rules concerning the extent of price discount?
What do business angels bring to a firm?
What are the following: MBO, MBI, PTP, a venture capital fund, seedcorn?
What is meant by the Efficient Markets Hypothesis?
What are the implications of the EMH for investors and for managers?
(Examination level) Bluelamp plc has grown from a company with £10,000 turnover to one with a £17m turnover and £1.8m profit in the last five years. The existing owners have put all their
Discuss the merits and problems of the pre-emption right for UK companies.
Mahogany plc has an ordinary share price of £3 and is quoted on the Alternative Investment Market. It intends to raise £20m through a one-for-three rights issue priced at £2.a What will the
Venture capital funds made a negative return on investments up to the end of 2010. Describe the role of venture capitalists in the UK economy and comment on the rates of return they generally intend
Manchester United plc, the quoted football and leisure group, wins the cup and therefore can anticipate greater revenues and profits. Before the win in the final the share price was 640p.a What will
The inexperienced finance trainee at Mugs-R-Us plc says that he can save the company money on its forthcoming issue of ten-year bonds. ‘The rate of return required for bonds of this risk class in
In what circumstances would you recommend borrowing from a bank rather than a capital market bond issue?
What are the fundamental considerations to which you would advise a firm to give thought if it were contemplating borrowing from a bank?What are the essential differences between an overdraft and a
What do banks take into account when considering the granting of an overdraft or loan?
‘Taking a long time to pay suppliers’ invoices is always a cheap form of finance.’ Consider this statement.
What is hire purchase and what are the advantages of this form of finance?
What is a syndicated loan and why do banks join so many syndicates?
What are the main considerations when deciding whether to borrow long or short?
a If the government sold a 10-year gilt with a par value of £100 and an (annual) coupon of 9 per cent, what price can be charged if investors require a 9.5 per cent yield to maturity on such bonds?b
Lummer plc has issued £60m 15-year 8.5 per cent coupon bonds with a par value of £100. Each bond is convertible into 40 shares of Lummer ordinary shares, which are currently trading at £1.90. What
Explain the term ‘the cost of capital’.
Explain how you might calculate the cost of equity capital.
Why can we not always take the coupon rate on a bond issued years ago as the cost of bond capital?
Describe the weighted average cost of capital and explain why a project, SBU or product line should not be evaluated using the cost of finance associated with the latest portion of capital raised.
Should the WACC be used in all circumstances?
Explain two of the practical difficulties in calculating a firm’s cost of capital.
In what ways are accounting-based performance measures inadequate for guiding managerial decisions?
Define value-based management.
What are the four key drivers of shareholder value creation?
What are the five actions available to increase value?
What is ‘good growth’ and what is ‘bad growth’?
In what circumstances would you reduce investment in a strategic business unit even if its profits are on a rising trend?
Briefly describe the main roles of the corporate centre in a value-led organisation.
What is shareholder value analysis and what are the seven value drivers as described by Rappaport?
What is economic profit (EP)? Describe the alternative ways of measuring it.
Describe the relative merits and problems of shareholder value analysis and EP.
What is the total shareholder return (TSR) and what are its advantages and problems as a metric of shareholder wealth creation?
Describe the metric market value added (MVA)and note the problems in its practical use.
(Examination level) ‘Thirty years ago we measured the success of our divisional managers on the basis of market share growth, sales and profits. In the late 1970s we switched to return on capital
‘EPS (earnings per share) is not a holy grail in determining how well a company is performing’: Lex column of the Financial Times, 7 May 1996. Describe and explain the reasons for dissatisfaction
Which of the following two companies creates more value, assuming that they are making the same initial investment?Profits for both companies are 20 per cent of sales in each year. With company A,
Busy plc, an all-equity-financed firm, has three strategic business units. The polythene division has capital of £8m and is expected to produce returns of 11 per cent for the next five years.
Apply shareholder value analysis to an all-equity firm with the following Rappaport value drivers, assuming that the last reported annual sales were £25m.Marketable securities amount to £5m and
Buit plc is trying to estimate its value under the current strategy. The managerial team have forecast the following profits for the next five years:Depreciation of fixed capital items in each of the
Mythier plc, in its first year, produced profits after deduction of tax but before deduction of interest of £1m. The amount invested by debt holders was £4m. Equity holders also invested £4m.
What are the problems of relying on NAV as a valuation method? In what circumstances is it particularly useful?
Why do analysts obtain historical information on a company for valuation purposes?
Explain why the dividend valuation model discounts all dividends to infinity and yet individual investors hold shares for a shorter period, making capital gains (and losses).
The dividend growth model takes the form:Does this mean that we are only valuing next year’s dividend? Explain your answer. Po= d ky-g
What are the main investigatory routes you would pursue to try to establish the likely range of future growth rates for a firm?
What are the differences between the crude PER model and the more complete PER model?
Why do PERs vary over time, and between firms in the same industry?
What additional factors might you consider when valuing an unquoted share rather than one listed on a stock exchange?
Why might a share have a different value to someone who was able to exercise control over the organisation from to someone who had a small, almost powerless, stake?
Explain the terms operating gearing, financial gearing, capital gearing, income gearing.
What are business risk and financial risk?
Modigliani and Miller’s original model resulted in three propositions. Describe them. Also, what are the major assumptions on which the model was built?
Describe how MM analysis changes if taxes are allowed into the model.
What is financial distress and how does it affect the gearing decision?
What are agency costs and how do they affect the gearing decision?
Describe the following ideas which are advanced to explain the low levels of gearing in some companies:(a) borrowing capacity, (b) managerial preferences, (c) pecking order, (d) financial slack,(e)
Some writers advocate the increased use of debt because of its beneficial effect on (a) managerial motivation, (b) reinvestment risk and (c) operating and strategic efficiency. Explain these ideas.
What are the two fundamental questions in dividend policy?
Explain the main elements of MM’s dividend irrelevancy hypothesis.
Explain the idea that dividends should be treated as a residual.
How might clientele effects influence dividend policy?
What is the effect of taxation on dividend payout rates?
What is meant by ‘asymmetry of information’ and‘dividends as signals’?
Explain the ‘resolution of uncertainty’ argument supporting high dividend payout rates. What is the counter-argument?
In what ways does agency theory influence the dividend debate?
When are share repurchases and special dividends particularly useful?
Outline a dividend policy for a typical fast-growth and high-investment firm.

Showing 1200 - 1300 of 1297

1
2
3
4
5
6
7
8
9
10
11
12
13

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Secure Payment

Download Our App

© 2024 SolutionInn. All Rights Reserved