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goblinko [34]
3 years ago
7

A firm's CFO is considering increasing the target debt ratio, which would also increase the company's interest expense. New bond

s would be issued and the proceeds would be used to buy back shares of common stock. Neither total assets nor operating income would change, but expected earnings per share (EPS) would increase. Assuming the CFO's estimates are correct, which of the following statements is CORRECT?a. Since the proposed plan increases the firm's financial risk, the stock price might fall even if EPS increases.b. If the plan reduces the WACC, the stock price is likely to decline.c. Since the plan is expected to increase EPS, this implies that net income is also expected to increase.d. If the plan does increase the EPS, the stock price will automatically increase at the same rate.e. Under the plan there will be more bonds outstanding, and that will increase their liquidity and thus lower the interest rate on the currently outstanding bonds.
Business
1 answer:
mylen [45]3 years ago
6 0

Answer:

A

Explanation:

Since the proposed plan increases the firm's financial risk, the stock price might fall even if EPS increases.

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Ilia_Sergeevich [38]
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QUESTION:- If the country was experiencing high inflation, the Federal Reserve could _____________________ to help slow down the growth & make the economy stable.

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3 years ago
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In a system of 100-percent-reserve banking, a. banks do not accept deposits. b. banks can increase the money supply. c. banks do
zheka24 [161]

The correct option is C). banks do not influence the supply of money.

<h3>What is 100-percent-reserve banking?</h3>

100-percent-reserve banking, is a system of banking, in which banks only lend from time deposits instead of lending demand deposits.

In a system with 100 percent reserve banking, banks cannot make the loans and do not influence the supply of the money.

This system is also known as full-reserve banking.

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8 0
2 years ago
Stock A has an expected return of 15 percent and the standard deviation of its returns is 20 percent. Stock B has an expected re
kiruha [24]

Answer:

Stock A will be preferable for the risk averse Investors.

Explanation:

The reason is that risk is the measure of the vulnerability of the returns on the investment made which means if the return on the investment has greater vulnerability of returns then it is highly risky. So the risk averse investor would prefer stock A with lower risk.

(Special comments:

It must be noted that the higher return shows that the investment is also highly risky because nobody is going to give you more with low risk associated investments. This means lower return on Stock B is also preferable here for the risk averse investor because it carries lower risks.)

4 0
3 years ago
How do you do income statement​
igomit [66]

To prepare an income statement, you will need to generate a trial balance report, calculate your revenue, determine the cost of goods sold, calculate the gross margin, include operating expenses, calculate your income, include income taxes, calculate net income and lastly finalize your income statement with business details and the reporting period.

If you can't find the time to make one from scratch, there are templates that can be used to help.

gross margin :  the amount of money a company retains after incurring the direct costs associated with producing the goods it sells and the services it provides.

net income : net earnings, is calculated as sales minus cost of goods sold, selling, general and administrative expenses, operating expenses, depreciation, interest, taxes, and other expenses.

3 0
2 years ago
what is the supply chain function that receives inputs from the demand plan to procure materials, equipment, and services?
Salsk061 [2.6K]

Procurement  is the supply chain function that receives inputs from the demand plan to procure materials, equipment, and services.

The process of organizing the many tasks necessary to create and distribute goods and services to a company's clients is known as supply chain management. The transfer of raw materials from the supplier to the producer to the final delivery to the customer is all included in the supply chain. Designing, farming, manufacturing, packaging, and transportation are a few examples of supply chain operations. A supply chain is the entire process of getting a finished good or service to the client. It may be necessary to obtain raw materials, convey them to the production facility, and then deliver the finished products to a customer.

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2 years ago
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