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Pls answer all parts. Question 3 Discuss the following statements: a. In a world of perfect capital markets a firm can increase the return on
Pls answer all parts.
Question 3 Discuss the following statements: a. In a world of perfect capital markets a firm can increase the return on its equity by increasing its debt ratio. True or false? Explain. b. The price of the bonds is all you need when comparing two bonds with the same face value to determine which one has a better return on investment. True or False? Explain. c. You can tell a lot about a firm's past performance by looking at its current stock price. True or False? Explain. d. Suppose you are an investor without access to any information regarding stocks. You know that other investors in the market possess a great deal of information and are actively using that information to select an efficient portfolio. You are concerned that because you are less informed than the average investor, your portfolio will underperform the portfolio of the average investor. How can you prevent that outcome and guarantee that your portfolio will do as well as that of the average investorStep by Step Solution
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