Top 10 Things to Know for TOF

Flashcards by dylan_earl, updated more than 1 year ago
Created by dylan_earl about 6 years ago



Resource summary

Question Answer
Main Objective of the firm is to maximize: _______________________ ___________ Shareholder Wealth
You cannot change the value of a firm by changing its _______________ policy Dividend
With taxes and no costs of financial distress, you can max the value of a firm by eliminating all stock and replacing it with ________ Debt
With no taxes: as amount of debt increases, cost of debt and cost of equity may increase but the ________ on _________ will not change. Return on Assets
If a project has Zero NPV when cash flows are discounted at WACC, then projects cash flows are ___________ to give all investors the returns they require Sufficient
If a projects return lies _________ the Security Market Line, then it is an attractive investment opportunity Above
You can reduce/eliminate ________ risk of stock but not the ___________ risk, by combining into portfolios Unique but not Market
A project that just breaks even on an accounting basis will have a ______________ Net Present Value Negative
Depreciation is not a cash flow, the ______ ______________ from depreciation is. Tax Savings
When interest rates (compounding frequencies) increase, the Present Value __________________ Decreases
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