Question 1: You are the CFO of a typical publicly traded firm in the U.S. How would you advise the firm's CEO, executives, and directors of the board (all of them as a group) on the following questions? Explain your reasoning as appropriate. Answer in general terms, but do reference specific major factors (e.g., certain firm characteristics) that would lead you to provide significantly different advice. Furthermore, be absolutely sure to (at least briefly) address how your advice would anticipate and be useful in times of great financial market and real economic stress (but don't make such circumstances the centerpiece of your answer). (2 marks) What would you recommend for the firm's investment policy? Be sure to address the firm's determination of its cost of capital. (3 marks) What would you recommend for the firm's financing policy? Be sure to address the implications for the firm's payout policy. (2 marks) What would you recommend for the firm's reaction to changes in its stock price? What would you advise management and shareholders if Elon Musk (of Tesla) started tweeting about the firm (assuming no economic relationship between the two firms)? (3 marks) How would you quantify the impact of the firm's numerous CSR activities on its financing policy decisions and its optimal financing choice? Be sure to address the two main channels at work here. (4 marks) What key considerations would you point out if the firm became an acquirer in a takeover? A target? What is the role of the main economic tension that arises in this context? (4 marks) What key considerations would you point out if the firm were still private and contemplating going public? What difference would it make if the firm were also contemplating issuing securities? All in terms of shareholder value maximization, why would the public firm consider going private, and describe the process in the medium and long runs? Question 1: You are the CFO of a typical publicly traded firm in the U.S. How would you advise the firm's CEO, executives, and directors of the board (all of them as a group) on the following questions? Explain your reasoning as appropriate. Answer in general terms, but do reference specific major factors (e.g., certain firm characteristics) that would lead you to provide significantly different advice. Furthermore, be absolutely sure to (at least briefly) address how your advice would anticipate and be useful in times of great financial market and real economic stress (but don't make such circumstances the centerpiece of your answer). (2 marks) What would you recommend for the firm's investment policy? Be sure to address the firm's determination of its cost of capital. (3 marks) What would you recommend for the firm's financing policy? Be sure to address the implications for the firm's payout policy. (2 marks) What would you recommend for the firm's reaction to changes in its stock price? What would you advise management and shareholders if Elon Musk (of Tesla) started tweeting about the firm (assuming no economic relationship between the two firms)? (3 marks) How would you quantify the impact of the firm's numerous CSR activities on its financing policy decisions and its optimal financing choice? Be sure to address the two main channels at work here. (4 marks) What key considerations would you point out if the firm became an acquirer in a takeover? A target? What is the role of the main economic tension that arises in this context? (4 marks) What key considerations would you point out if the firm were still private and contemplating going public? What difference would it make if the firm were also contemplating issuing securities? All in terms of shareholder value maximization, why would the public firm consider going private, and describe the process in the medium and long runs
