1. There are two companies.Company 1 has a Beta of .4 and Company 2 has a Beta of 1.8.Which of these companies is an electric utility and which is a technology company?
2. As a company uses more and more equity in its capital structure (and less debt) what is it doing to the financial risk of the company - increasing it or decreasing it?
3. You are running a company with two divisions. One division is high risk and the other division is low risk. Which division should (or is expected to) earn a higher rate of return or ROIC? Why?
4. Do most industries have the same optimal financing mixture, or does it change depending on the industry? Explain.
5. You are running a company with two divisions. One division is high risk and the other division is low risk.