Finance and risk management - international business - Practice Exam 1
A company has a semi-annual coupon bond outstanding. A decrease in the market required rate of return will have an effect on this bond. Which effect is meant here:Increase of the market priceIncrease of the coupon rateDecrease of the market priceDecrease of the coupon rate A firm is comparing two different capital structure plans, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, the firm would have 178,500 shares outstanding. Under Plan II, there would be 71,400 shares outstanding and €1.79 million in debt outstanding. The interest rate on the debt is 10% and there are no taxes. What is the break-even EBIT?€341,414.14€351,111.11€298,333.33€287,878.78 Consider the the dividend growth model, an increase in which of the following will increase the current value of an equity?I. Dividend amountII. Number of future dividendsIII. Discount rateIV. Dividend growth rateI, II, and III onlyI, II, and IV onlyI, II, III, and IVIII and IV only A company is considering a new project. The project will require €500,000 for new non-current assets, €200,000 for additional inventory, and €40,000 for additional trade receivables. Short-term debt is expected to increase by €150,000. What is the project's cash flow at time zero, which is the sum of investments in new non-current assets and net working capital?-€890,000-€614,000-€590,000-€500,000 A conflict of interest between the shareholders and the management of a firm is called:shareholders' liabilitycorporate activismcorporate breakdownthe agency problem Daphne invested €1000 seven...
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