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Homework answers / question archive / Aa Bb CCC ay
Aa Bb CCC ay. AE. .. 1 Normal 1 No Spac... Heading 1 Heading 2 Title Subtitle Paragraph Styles Do you agree with the following statements - explain the reason for the same. a. Shareholders require higher expected rates of return on shares with more variable rates of return. b. Mr. Rahul invests Rs. 5,000 in T-bills and Rs. 15,000 in the market portfolio will have a beta of 1.5 on his investment portfolio. c. Each project should be evaluated at its own opportunity cost of capital. The true cost of capital depends on the use to which the capital is put. d. Financial leverage increases the expected return and risk of the shareholder. e. A company declare high dividend payout, with a large proportion of inside ownership, all of whom are high income individuals. Attempt both the questions a) What is pecking-order theory of capital structure? If the theory is right, would you expect very profitable firms to borrow more or less than the average? b) What is WACC? List out the issues involved in estimating the WACC?
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