Which of the following are the factors for the Fama-French model? 1. The excess market return, a size factor, and a debt. 2. a. The excess market return, a size factor, and a book-to-market factor. 3. b. The excess market return, a debt factor, and a book-to-

Which of the following are the factors for the Fama-French model? 1. The excess market return, a size factor, and a debt. 2. a. The excess market return, a size factor, and a book-to-market factor. 3. b. The excess market return, a debt factor, and a book-to-

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 2MC: What is the market interest rate on Jana’s debt, and what is the component cost of this debt for...

See similar textbooks

Related questions

Q: Assume that the risk-free rate increases, but the market risk premium remains constant. What impact…

A: Risk free rate is free from the risk. Every rate of return given is depends on the risk free rate.

Q: Describe the Ratios that show how a firm uses debt financing?

A: Debt to Asset ratio It is a ratio that helps in measuring the company’s assets financed through the…

Q: source of finance is the middle layer between equity and debt

A: Sources of finance: The companies require finance to fund their purchase of assets and run the…

Q: Which of the following statements is not correct? Select the correct response: The principal amount…

A: ANSWER: WHEN A NON CASH ASSET IS ACQUIRED AND THE STATED RATE OF INTEREST IS DIFFERENT FROM THE…

Q: You now need to calculate the cost of debt for Harvey Norman. Go to www.westpac.com.au and find the…

A: Harvey Norman Holdings WACC % As of today (2020-11-17), Harvey Norman Holdings's weighted average…

Q: Which of the following is the worst measure of the cost of debt? Estimating Interest Rate based on…

A: The cost of debt is the effective return that a company pays for its debt to its debtholders. It is…

Q: What are the relative advantages of equity versus debt financing?

A: Equity financing is selling a stake in your firm in return for a monetary investment. In contrast to…

Q: How can the effect of below-market-rate loans on value be determined using investor criteria?

A: Below market interest loan is the loan on which interest rate is charged less than the current…

Q: Why is the relevant cost of debt the interest rate on new debt, not that on alreadyoutstanding, or…

A: The pre-tax cost of debt for a company, rd, is the interest rate the company should settle on fresh…

Q: Is the relevant cost of debt, when calculating the WACC, theinterest rate on already outstanding…

A: Answer: For some decisions the embedded costs are significant but not for others. For example, when…

Q: According to the trade-off theory, the decision on capital structure entails a trade-off between the…

A: Capital structure means the way of getting finance from different sources.

Q: How do Debt, CoCo, and equity price react respectively to the fluctuation of the financial market?…

A: The question is based on the concept of components of capital used by banking companies. A bank can…

Q: What are the primary differences between debt financing and equity financing?

A: Financing refers to providing the funds to the business for business activities, individuals and…

Q: Derive the inverse relationship between Price and Yield in debt markets using a property-based…

A: The question is based on the concept of calculating the value of debt and fixed-income security with…

Q: What are potential problems or limitations of using methods, to estimate the cost of debt, that rely…

A: Bond Ratings are the metrices used to determine the bond's quality and riskiness. It is the rating…

Q: The present market economy come under _________________ C's of Credit. a. Capital b. Conditions c.…

A: These are the main Cs related to granting of loans. Banks and financial institutions look at these…

Q: tatements, how would one calculate the Book Debt-to-Equity Ration and the Market Debt-to-Equity…

A: Debt to Equity ratio is the ratio which indicates the relative proportion of debt and equity which…

Q: b. What is the market interest rate on Coleman's debt and its component cost of debt?

A: Given: The firm tax rate is 25% The current price of coleman’s is 12% The current price of firm is…

Q: What is the difference between debt and equity financing?

Q: 1-what are the relations between economics, finance, and accounting? 2-what is the difference…

A: the economics provided a broader picture of the economic environment for making the decisions in…

Q: What is the percentage of debt used to finance Gap? ____________ What is the percentage of owner’s…

A: Total liability 2019=Current liability+Long term liability=$2,174+$2,322=$4,496

Q: Debt to Total Assets Ratio can be improved by: A. Borrowing More, B. Issue of Debentures, C. Issue…

A: Debt to total assets ratio measures the proportion of total assets finance by creditors. it can be…

Q: What is the price paid to borrow debt capital called?

A: The amount that is borrowed by the company from financial institutions, banks, or by issuing the…

Q: sources of financing through LO

A: Long term debt is a non current liability that is liable to be paid after one or more years.

Q: Explain or illustrate before-tax cost of debt and after-tax cost of debt. 5. What are the…

A: The equity source and debt source of financing is considered to be important in capital structure.…

Q: The discount rate used in a net present value analysis is the ________. A. rate of interest…

A: Net present value is calculated by the deducting the present value of cash outflows from the present…

Q: Which of the following instruments has the highest cost? Seleccione una: a. Fed Funds b. Commercial…

A: The assets that can be traded at a specific rate and act as capital are called financial…

Q: Explain the Leverage and the Incremental Cost of Debt with example?

A: Leverage – Leverage is a financial term it means using the debt for their financial needs and…

Q: What does the book value of debt and equity refer to? O A. The par values of common stock and the…

A: The par value of stock is the price which is usually set at when the stock is issued. It is present…

Q: expense on short term debt should be based on projected balances and short term interest rates.…

A: Basic Concept of accounting

Q: to

A: Why do we use the market value of debt and equity to estimate WACC instead of the book value :…

Q: What is the significance of credit/debt ratings

A: Credit Ratings: Credit Rating is an estimate of the borrower (be it a person, organization, or…

Q: The interest rate at which the MARR is established depends principally upon the cost of capital and…

A: Cost of capital is the cost will be incurred on capital employed. cost of capital is the weight…

Q: Which one is measurable debt burden? Select one: a. Varaiances b. Debt per capita c. None of the…

A: The correct option is b. Debt per capita

Q: A debt – to income ratio can easily be calculated be from a what kind of statement? Investment…

A: The debt-to-income ratio seems to be the percentage of your monthly earnings that you allocate to…

Q: Which of the following theories can be assessed using data that exists at one specific point in…

A: Purchasing power parity: Purchasing power parity (PPP) is a concept which means that exchange rates…

Q: Is there a readily recognisable debt-to-equity ratio that maximises a firm's value? What are your…

A: The debt-to-equity ratio is derived by dividing a company's total debt by its total equity. This…

Q: Assume that the risk-free rate increases, but the market risk premium remains constant. What impact…

A: Risk free rate is the return which investors expect from an investment with zero risk. One such…

Q: (c)Critically evaluate the merits and demerits of using long-term debt as a source of finance as…

A: The question is based on the concept of capital structure and components of capital structure.

Q: ate at which the MARR is esta

A: Cost of capital is the weighted average cost of debt and equity financing.

Q: What does the debt to equity ratio show, and how is it calculated?

A: The debt-to-equity (D/E) ratio is calculatedby dividing a company's total liabilities by its…

Q: Which of the following can be categorized as Long term sources of finance ? i Equity Shares ii Trade…

A: Equity shares: Equity shares are a Long-term financing source of a company. Equity shares represent…

Q: What is the difference between yield to maturity on outstanding debt and coupon rate? Which is a…

A: Honor code: “Since you have asked multiple questions, we will solve the first question for you. If…

Question

Which of the following are the factors for the Fama-French model?

	1.	The excess market return, a size factor, and a debt.
	2.	a. The excess market return, a size factor, and a book-to-market factor.
	3.	b. The excess market return, a debt factor, and a book-to-market factor.
	4.	d. A debt factor, a size factor, and a book-to-market factor.
	5.	e. The excess market return, an industrial production factor, and a book-to-market factor.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Which one of the proportions of debt in the following chart is the optimal level? Firm Value Vu+ TD A B OD OC A B C -Vu + TD - Financial Distress Costs D Proportion of Debt
4. Explain or illustrate before-tax cost of debt and after-tax cost of debt. 5. What are the relationships between: a) interest rate and cost of debt; b) default risk and cost of debt; and c) bond rates and interest rates? 6. What is the difference between yield to maturity on outstanding debt and coupon rate? Which is a better measure of cost of debt between the two? 7. How is COST OF preferred equity computed?
a. What is debt management ratio? b. What is profitability ratio?
Which one is measurable debt burden?Select one:a. Varaiancesb. Debt per capitac. None of the other pointsd. Statistically
Is the relevant cost of debt, when calculating the WACC, theinterest rate on already outstanding debt or the rate on newdebt? Why?
The discount rate used in a net present value analysis is the ________. A. rate of interest earned on a savings account B. rate of inflation C. rate of interest charged for debt financing of an investment D. required rate of return or the hurdle rate
4. Explain or illustrate before-tax cost of debt and after-tax cost of debt. 5. What are the relationships between: a) interest rate and cost of debt; b) default risk and cost of debt; and c) bond rates and interest rates?
6. What is the difference between yield to maturity on outstanding debt and coupon rate? Which is a better measure of cost of debt between the two? 7. How is COST OF preferred equity computed?
What is market debt ratio?
MIRR is usually calculated with the same reinvestment rate as that embedded in the cost of debt NPV cost of equity IRR regular payback method
Which one of the following is the best indicator of long-term debt paying ability? A)Working capital turnover. B)Asset turnover. C)Current ratio. D)Debt to total assets ratio.
Which of the following deals with instrument relating to long-term debt and equity? Select one: A. Foreign Exchange Market B. Money Market C. Capital Market D. Commodities Market