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You will provide a short analysis of the interaction of group members that you observe in action
Write out and explain the dividend valuation model for a constant growth stock in both the valuation and expected rate of return forms.
What is meant by a bond’s yield to maturity (YTM)? By its yield to call (YTC)?Differentiate between price risk and reinvestment rate risk.
Do investor-owned businesses have a significant financing advantage over not-for-profit businesses?
Are there any conflicts that might arise between the issuer and the investment banker when setting the offering price on a stock issue?
A project in a for-profit business is held as part of what two portfolios? What is a corporate beta, and how is it determined?
How is the beta of a portfolio related to the individual betas of the investments that make up the portfolio?
Explain the situations in which each of the risk types—stand-alone, corporate, and market—are relevant.
How do changes in risk aversion and inflation expectations affect the SML? Write out the equation for the Security Market Line (SML) and graph it.
What happens to the market-clearing, or equilibrium, interest rate when the loan demand changes?
What is the difference between short-term debt and long-term debt. Describe the key features of a term loan.
What is the primary motivation for investors to purchase municipal bonds? Describe the major differences between corporate and municipal bonds?
How might a hospital that expects to have a temporary cash shortage during the coming year make sure that needed funds will be available?
What is the difference between technical default and “regular” default? What impact does a call provision have on an issue’s interest rate?
What impact do debt ratings have on the cost of debt to the issuing firm? What does “credit enhancement” mean?
Do the interest rates on Treasury securities include a default risk premium (DRP)? A liquidity premium (LP)? A price risk premium (PRP)? Explain your answer.
Does the default risk premium incorporate only the probability of default? Explain your answer.
If short-term rates are lower than long-term rates, why may a business still choose to finance with long-term debt?
What are the primary advantages and disadvantages of debt financing compared to equity financing?
Should preferred stock be considered as equity or debt financing? Explain your answer.
Name several types of classified stock and explain their uses. What is the preemptive right, and what is its purpose?
What is a private placement and what are its primary advantages over a public offering?
What is the difference between selling HCA shares in the primary market and selling the firm’s shares in the secondary market?
What are the advantages and disadvantages associated with common stock financing?
Create a brief 1-page essay, explain what is meant by the statement above and how you can apply your learning from course to your future career.