Assume that you have recently graduated and have just reported to work as an investment advisor at
Question:
a. Why is corporate finance important to all managers?
b. Describe the organizational forms a business might have as it evolves from a start-up to a major corporation. List the advantages and disadvantages of each form.
c. How do corporations "go public" and continue to grow? What are agency problems? What is corporate governance?
d. What should be the primary objective of managers?
1. Do firms have any responsibilities to society at large?
2. Is stock price maximization good or bad for society?
3. Should firms behave ethically?
e. What three aspects of cash flows affect the value of any investment?
f. What are free cash flows?
g. What is the weighted average cost of capital?
h. How do free cash flows and the weighted average cost of capital interact to determine a firm's value?
i. Who are the providers (savers) and users (borrowers) of capital? How is capital transferred between savers and borrowers?
j. What do we call the price that a borrower must pay for debt capital? What is the price of equity capital? What are the four most fundamental factors that affect the cost of money, or the general level of interest rates, in the economy?
k. What are some economic conditions (including international aspects) that affect the cost of money?
l. What are financial securities? Describe some financial instruments.
m. List some financial institutions.
n. What are some different types of markets? Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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Related Book For
Financial Management Theory and Practice
ISBN: 978-0176517304
2nd Canadian edition
Authors: Eugene Brigham, Michael Ehrhardt, Jerome Gessaroli, Richard Nason
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