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Author Question: By raising capital at lower cost, bonds lower risk for shareholders. Indicate whether the ... (Read 86 times)

lidoalex

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on: Jul 1, 2018
By raising capital at lower cost, bonds lower risk for shareholders.
 
  Indicate whether the statement is true or false

Question 2

The current value of a business firm is the present value of all its future profits.
 
  Indicate whether the statement is true or false


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mceravolo

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Reply #1 on: Jul 1, 2018
Answer to Question 1

F Bondholders have first claim on earnings, which means that shareholders will bear more risk when bonds are outstanding.

Answer to Question 2

T This is a reasonable way to characterize the value of a firm, though it is not easy to know the future in order to apply it.


lidoalex

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Reply 2 on: Jul 1, 2018
Wow, this really help

mjenn52

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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