Financial management, online test, the test time is from Monday to Friday next week. At this stage, I will put in the list first, because the questions have not yet been released, and the test time
1.
Define Weighted Average Cost of Capital (WACC) describe each component used in the WACC formula. Based on the textbook how is the WACC used in capital budgeting and investment decisions?
2.
As a corporation what are the benefits and ramifications of using convertible debt to finance a publicly traded company? As an investor what are the benefits and ramifications of purchasing convertible debt in a publicly traded company? Are there any conflicts between the goals of the investor and the goals of the corporation?
3.
Which two of the six methods used to evaluate the value of projects, and to decide whether or not they should be accepted, do you prefer as a financial manager? Explain why you decided on these two and not the other four. List the perceived deficiencies of the four not selected.
4.
What are the benefits and costs of placing a financially troubled company into a Chapter 11 Bankruptcy proceeding? Is this a legitimate and ethical vehicle for management to use for the benefit of the company’s stakeholders? Why do creditors usually accept a plan for financial rehabilitation rather than demand liquidation of the business?
5.
Edmund Corporation recently made a large investment to upgrade its technology. Although these improvements won’t have much of an impact on performance in the short run, they are expected to reduce future costs significantly. What impact will this investment have on Edmund’s earnings per share this year? What impact might this investment have on the company’s intrinsic value and stock price?
6.
Define the term synergy between companies that either merge or experience an acquisition. What are the ways companies can harness the benefits of synergy?
7.
Compare and contrast the following types of mergers. Explain the advantages and disadvantages of each:
1. Horizontal merger vs vertical merger;
2. Congeneric merger vs conglomerate merger c.
3. Friendly merger vs hostile merger vs defensive merger; t
4. Operating merger vs financial merger
8.
Compare the advantages and disadvantages of each of the following terms related to bankruptcy:
a. Informal restructuring vs reorganization
b. Absolute priority doctrine vs relative priority doctrine
c. Chapter 11 vs Chapter 7
9.
If the United States imports more goods from abroad than it exports, then foreigners will tend to have a surplus of U.S. dollars. What will this do to the value of the dollar with respect to foreign currencies?
What is the corresponding effect on increased foreign investments into the United States from foreign investors? How will this activity impact the value of the US dollar?
10.
Suppose you want to open a new business. Which of the types of company formations would you choose and why? Sole proprietorship; partnership; corporation; or limited liability company;
Suppose your business is a technology startup that is doing well and that needs to raise capital. Describe and compare some of your capital options (debt and equity) and describe the types of capital sources and markets and what they are each used for (angel and venture capital funding, money market; capital market; primary market; secondary market; private markets; public markets;)
