Direct financing involves the financial market and indirect financing involves intermediaries. In the financial market, companies put their shares for sale and investors buy them. This is a direct financing mechanism for companies, which raise funds by sharing their own capital in traded shares.
On the contrary, if a company seeks bank financing, there will necessarily be intermediation by third parties, such as banks. In the middle market, economic agents deposit their money with the bank, and the bank uses it to lend to companies. This is intermediating a financing. Both types of financing are widely used, all will depend on the structure and purpose of each company in the search for financing.
Answer:
The expected rate of return on this stock is 10.31%
Explanation:
The constangt growth model of the DDM approach is used to calculate the price of a share based on the edxpected future dividends from a stock that are growing at a constant rate. The formula for price using constant growth model is,
P0 = D0 * (1+g) / (r - g)
Plugging in the values,
65 = 1.7 * (1+0.075) / (r - 0.075)
65 * (r - 0.075) = 1.8275
65r - 4.875 = 1.8275
65r = 1.8275 + 4.875
r= 6.7025 / 65
r = 10.31% or 0.1031
Answer:
the reason or reasons one has for acting or behaving in a particular way
Explanation:
