How would you rank these three firms in decreasing order of expected debt ratios: a biotechnology firm, an auto-parts firm, and an electric utility? Explain.
Answer to relevant QuestionsWhy are companies with a weak board of directors likely to be underlevered (they would use less debt than the optimal amount they could issue)? Maltonese Inc. has 5 million shares outstanding selling at $60 each, and its price-to earningsratio (P/E) is 10. Targeton Corp. has 1.5 million shares outstanding with a market price of $30 each, and its P/E ratio is 6. ...Explain the difference between the risks that make up the following pairs: a. Business risk versus financial risk b. Diversifiable risk versus un diversifiable risk c. Systematic risk versus unsystematic risk d. Insurable ...Charles has a problem. His boss thinks that options are a form of gambling. The company he works for exports to European markets, which require euro invoicing. The market is cutthroat, and sales are made on the basis of ...The Brankton Company, an American firm, considers investing in Spain. The investment will cost €125 million and is expected to generate, after taxes, €30 million a year during the next five years in real terms, that is, ...
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