Finance exercise questions


Hi

I have 8 finance exercise questions that each need an answer of between 60-100 words per question. See below and file attached.

Finance Exercise Questions – (60 -100 words per question) –

Q1. (6-4) - In what ways do uninformed investors trade too much? Discuss how uninformed investors use the CAPM and how their behaviour’s deviate.

Q2. (7-2) - Define and discuss MM Proposition I with its implications, and the roles of homemade leverage and the Law of One Price in the development of the proposition.

Q3. (7-3) - What is leveraged recapitalization and what effects does it have on the value of equity?

Q4. (7-4) - Define the optimal fraction of debt and the growth rate of a firm. What is the relationship between the two?

Q5. (9-1) - What is a constant interest coverage policy and how does it impact the levered value of a project?

Q6. (9-2) - Why should issuance costs and mispricing costs be included in the assessment of the project’s value? How do you include them?

Q7. (9-3) - Why is it important to calculate the value of the interest tax shield if a firm adjusts its debt annually to a target level?

Q8. (9-4) - For what reasons would a firm use a financial model in projecting future cash flows from an investment, and what are the primary factors to consider when making the cash flow estimates?

References
Berk, J. & DeMarzo, P. (2011) Corporate Finance: The Core (2nd ed.). Boston, MA: Prentice Hall.

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