Answer:
D. Home made Leverage
Explanation:
Home made leverage is a situation in which an investor utilizes borrowed funds to artificially adjust or change the level of leverage of a company. An Home made leverage can be used to turn an unleveraged company to a leveraged one.
One of the terms of home made leverages, however, is that, the investor who is borrowing to make a company leveraged must be able to borrow at the same borrowing cost of the firm.
Reason for Using Home Made Leverage
One of the main reasons is as stated in the question, which is to replicate a corporation's capital structure.
According to Modigliani-Miller theorem, however, the home made leverage will only work smoothly for an investor as long as taxes and bankruptcy costs are absent and the market is efficient. This clause is the reason for the initial clause that home mode leverage works as long as the investor is able to borrow at the same borrowing cost as the firm.
Answer:
$700
Explanation:
In cost benefit insurance , the intervention and its benefit are evaluated to arrive at the best decision for the insured party.
Working
Potential lawsuits - $750,000
Deductible insurance - $50,000
Possibility of injury /death = 1/1000
Maximum payment for insurance - $(750000-50000)/1000
$700
<span>If the corporate bond yields 6.7% and is taxed at 27% there is no effective difference in yield; it would bring the yield down to 4.89%. There would be no difference between a tax free municipal bond or a taxable corporate bond in this scenario.</span>
Answer: efficiency of the tax
Explanation:
From the question, we are informed that the city of Hartwell spends about $3 million annually on snow removal and that the city is considering amending its real property tax law to allow homeowners to offset the cost of private snow removal against their annual property tax.
It should be noted that the amendment to the affect the efficiency of the tax. The aim of the amendment in this case is to help change the behavior of the taxpayer by giving out rewards to the people who remove their own snow.
