Several board members discuss using stock to raise capital as they do not want to hurt company credit rating. What makes the most sense: . A. Issuing stock will decrease the debt to ebitda ratio B. Issuing stock will increase ROE C. Issuing stock will decrease NI D. Issuing stock will increase EPS
True or False: The board should look at Company corporate debt YTM to get an idea of their current debt coupon cost and can add a historic equity risk premium or spread to that to derive their cost of equity
The answers are given below
1] Several board members discuss ....................... What makes the most sense: .
A. Issuing stock will decrease the debt to ebitda ratio
2] True or False: The board should look at Company corporate debt YTM to get an idea of their current debt coupon cost and can add a historic equity risk premium or spread to that to derive their cost of equity.
TRUE.
It is another method of finding the cost of equity-Bond yield+risk premium
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