Question: 1. How do companies decide on their capital structures? Do many publicly-traded companies have preferred stocks in their capital structures? 2. Explain what is meant

1. How do companies decide on their capital structures? Do many publicly-traded companies have preferred stocks in their capital structures?

2. Explain what is meant by business and financial risk. Suppose firm A has greater business risk than firm B. Is it true that firm A also has a higher cost of capital? explain.

3. What are some methods for adjusting our capital investment models (NPV, IRR, Payback, etc) for the risk of the project as well as the various outcomes of projects?

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