Capital rationing
Explain in brief capital rationing? What are reasons that a firm should practice capital rationing?
Expert
The Capital rationing is a practice of defining dollar limits on the basis of invested amount in the new capital budgeting projects. Private corporations, partnerships and proprietorships are in a position to do anything that owner desires. It can be discussed that for a publicly traded corporation capital rationing might not be reliable with maximizing the firm’s value. This is mainly due to some value adding projects might get rejected if they will make the firm to exceed self imposed capital rationing limit.
Explain the term Boundary/final conditions in finite-difference methods.
Great Corporation has the following capital situation. Debt: One thousand bonds were issued five years ago at a coupon rate of 11%. They had 20-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 37% Preferred stock: Two thousand shares of preferred are outstanding
Explain the conditions for assuming a deterministic stock price path for an equity option.
What are the difficulties GARCH contained?
Define working capital. What is the main advantage to a corporation by investing some of its funds in working capital?
In order for a derivatives market to function two kind of economic agents are required: hedgers & speculators. Describe.Two kinds of market participants are essential for the operation of a derivatives market: speculators & hedgers.
foreign countries to finance its current account deficits
Should you place all your money in a stock which has low risk but also low expected return, or one along with high expected return but that is far riskier or maybe divide your money among the two?
What are the difference between Capital Asset Pricing Model and Markowitz’s Modern Portfolio Theory?
Explain the concept of the risk–return relationship.
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