Question

Several board members discuss using stock to raise capital as they do not want to hurt...

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

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Answer #1

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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