The existence of pre-tax cost of debt and post-tax cost of debt is due
to the acknoledgement of the tax benefit from issuing debt.There is no
tax benefit from paying divdends,so it makes no sense talking about
pre-tax,post-tax cost of equity for a firm.When you think about cash
flow to equity you can only assume that the taxes owed by the company
have already been paid.Now, the taxation over the income of the
shareholder is a whole different issue that does not take place in this
discussion,since it is not taken in consideration either in cost of
equity or cost of debt.
Answer:
B. you are borrowing money from another person
Explanation:
rest is you giving money to others which if you could youd want higher interest rates for
Answer: 0.3
Explanation:
The Sharpe ratio is simply used by organizations and investors in order to compare the return on an investment to its risk.
From the question, we are informed that a portfolio has a 30% standard deviation generated a return of 15% last year when T-bills were paying 6.0%.
The Sharpe ratio will be:
= (15% - 6.0%)/30%
= 9%/30%
= 0.09/0.3
= 0.3
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