Corporate Finance (FIN201)

Learning Goal: I’m working on a finance multi-part question and need an explanation and answer to help me learn.

My order:

1- No plagiarism, no match please.

2-You can find the instructions inside the doc

3- Please write a paper in the document

4- Write a report on whatever you use to research and what you write in a different document because we will discuss it separately in class

Write at least 8- references using the APA style.


Please use simple language

Put the in-text quote in each.

Additions within the document Write at least 5- references using the APA style.True/False( Marks- 1 x 5= 5 )

1. If shareholders do not like the policies that management pursues, their easiest solution is to vote in a different board of directors.
( Answer-)

2. The price at which new shares are sold to investors almost always exceeds par value. The difference is entered into the company’s accounts as additional paid-in capital, or capital surplus.

( Answer-)

3. Suppose a firm needs fresh capital, but its management does not want to give up its controlling interest. The existing shares could be labeled Class A, and then Class B shares with limited voting rights could be issued to outside investors.
( Answer-)

4. When securities are priced fairly, then financing at current market rates is a positive NPV transaction.
( Answer-)

5. All large corporations have little debt; it is a necessary condition for maximizing growth.
( Answer-)




Essay Questions: – Marks ( 2.5 x 4 = 10 )

Q-1. List four protective covenants that you might be interested in as a prospective bondholder. Briefly describe why these would be realistic bondholder concerns. How would a convertible bondholder decide whether to exercise his rights of exchange? ( Words- 300 to 400 )

Q-2- How do venture capital firms design successful deals? Why it is likely that venture capital is disbursed in installments, rather than issuing all necessary funds at once? ( Words- 300 to 400 )

Q-3- (A)- Calculate the annual value of an interest tax shield under the assumption that a firm maintains debt at a permanent $1,000,000 level and rate of 12%. The corporate tax rate is 35%. If there is no chance of financial distress, how does the value of the firm change as a result of this debt?

(B)- How are dividends paid and how do companies decide on dividend payments? Discuss the concept of dividend signaling. ( Words- 250 to 350 )

Q-4- Discuss how agency problems can develop between shareholders and bondholders when the firm is experiencing financial distress. Is there a rule for finding optimal capital structure? ( Words- 300 to 400 )

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