Question 17

Match the following

A model that relates the risk-return trade-offs of individual assets to market returns. A security is presumed A. Bankruptcy

to receive risk-free rate of return plus a premium for risk

B. Beta

C. Weighted Average Cost of Capital

The market value of a firm s assets are less than its liabilities, and the firm has a negative net worth

D. Capital Structure Theory

V A value equal to income after taxes plus non cash expenses.

E. Cash Flow

A theory that addresses the relative importance of debt and equity in the overall financing of the firm

F. Standard Deviation

Ameasure of volatility of returns on an individual stock relative to the market

G. Capital Asset Pricing Model

Supenor growth of a firm may achieve during its early years, before leveling off to a more normal growth

H. Supernormal Growth

Ameasure of the spread or dispersion of a series of numbers around the expected value

I. Debenture

The computed cost of capital determined by multiplying the cost of each item in the optimal capital structure

by its weighted representation in the overall capital structure and summing the results

Match the following A model that relates the risk-return trade-offs of individual assets to market returns. A security is presumed A. Bankruptcy to receive risk-free rate of return plus a premium for risk B. Beta The market value of a firma s assets are less than its liabilities, and the firm has a negative net worth A value equal to income after taxes plus non cash expenses C. Weighted Average Cost of Capital D. Capital Structure Theory E. Cash Flow F. Standard Deviation A theory that addresses the relative importance of debt and equity in the overall financing of the firm A measure of volatility of returns on an individual stock relative to the market Superior growth of a firm may achieve during its early years, before leveling off to a more normal growth A measure of the spread or dispersion of a series of numbers around the expected valuo G. Capital Asset Pricing Model H.Supernormal Growth 1. Debenture The computed cost of capital determined by multiplying the cost of each item in the optimal capital structure by its weighted representation in the overall capital structure and summing the results