Increasing a country's risk-free rate could _______ the cost of equity to an MNC in that country; increasing a country's risk-free rate could ________ the cost of debt to an MNC in that country, assuming that the other things held constant. A. increases; not affect B. not affect; increase C. increase; increase D. not affect; not affect
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Increasing a country's risk-free rate could _______ the
increases; not affect
not affect; increase
increase; increase
not affect; not affect
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- Suppose interest rates in the economy increase. How would such a change affect the costs of both debt and common equity based on the CAPM?How COVID-19 affect international capital market. In general, does the market value of companies reduced or increased?What are the potential consequences of a country having a largeoverall debt? If you were in the position to implement a solutionfor the country’s long-term debt, what would it be and why?
- 1. Suppose that a financial institution has a negative $25 million difference between its assets and liabilities. Is the institution exposed to refinancing risk or reinvestment risk and what will happen to net income if there is a rise in interest rates? 2. Suppose a financial institution has a positive $25 million difference between its assets and liabilities. Is the institution exposed to refinancing risk or reinvestment risk and what will happen to net income if there is a drop in interest rates?FE1 Show your work for problem solving questions. If you use one or more sources of information in preparing any answer, provide an APA-style reference, identify any quoted information, and cite a reference wherever it is used. How would each of the following events change the equilibrium financial market value of a company? (a)an increase in its cost of production; (b) an increase in its cost of financing; (c) an increase in the market’s discount rate; (d) an increase in its sales revenue; and (e) an increase in its projected future profits.27. A primary financial market is one that: A. offers financial assets with the highest expected return B. offers the greatest number of financial assets C. offers financial assets with the highest historical return D. involves the sale of financial assets for the first time
- Short run vs. Long Run a.Why on the long run, fiscal and monetary policies are not effective?Subsidy on inputs (A) increase inflation(B) decrease inflation(C) does not directly affect economic growth or cannot be determinedCountry differences, such as differences in the risk-free interest rate and differences in risk premiums across countries, can cause the cost of capital to vary across countries. The answer to this question in True. Group of answer choices True False
- In a CDO structure, when economic condition turns out to be better than previously expected, the cash flow from the pool of underlying assets (such as mortgage loans or consumer loans) is more than the level reflected in the original(previous) pricing of the tranches. In this scenario, which tranche’ rate of return will turn out to be higher than others? → (1) Senior tranche; (2) Mezzanine tranche; (3) Junior tranche;Q3-3 Under a flexible-rate system, when the BP curve is flatter than the LM curve (i.e., there is relative capital mobility), an autonomous increase in foreign interest rates will have what impacts on the domestic interest rate and domestic national income? Select one: a. domestic interest rate will increase, domestic national income will decrease b. domestic interest rate will increase, domestic national income will not change c. domestic interest rate will increase, domestic national income will increase d. domestic interest rate will not change, domestic national income will decrease2. The Trade-Off Model A. "The trade-off model of debt financing implies that an increase in the interest rate on debt will cause the level of debt to decline." Do you agree or disagree? Please explain. B. Discuss the likely effects of an increase in uncertainty about cash flows on the responsiveness of a firm's debt level to changes in the interest rate on debt.