Question

Q Why is it difficult to draw conclusions on the diversification discount? Name one reason Q...

Q Why is it difficult to draw conclusions on the diversification discount? Name one reason

Q Why do firms in financial distress can have problems in raising funds from investors? Name one reason

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1. It is difficult to draw conclusions on the diversification discount since the results there is no strict correlation between the firm's value and the firm's choice to diversify. Often, there have been mixed results with some stocks that have diversified have been trading at a premium while for some the managers have not been able to put the cash flows to a singe source use thereby negating stock value.

2. The value of the firm reduces when in it is financial distress and investors may pass on a profitable investment to avoid any sort of risk.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1) Explain why it is difficult to draw conclusions about the conformational changes of a protein...
1) Explain why it is difficult to draw conclusions about the conformational changes of a protein based on a single crystal structure. 2) Polyacrylamide gels can be prepared in the presence of varying percentages of acrylamide, leading to different pore sizes. Why might this variability be useful?
One reason why diseconomies of scale may arise is because: Select one: a. layers of management...
One reason why diseconomies of scale may arise is because: Select one: a. layers of management may have become more difficult to control. b. labour would be more productive in a larger sized firm. c. machinery breaks down more frequently in larger firms. d. the law of diminishing returns applies.
1. What conclusions can you draw from the data gathered from one small bag compared to...
1. What conclusions can you draw from the data gathered from one small bag compared to several small bags of M&Ms? 2. A 5 pound bulk bag of M&Ms holds approximately 2400 pieces. How many of each color should we expect to find in the bag based on the results of the proportions from the entire class? (approximate number of each color to be rounded to the nearest whole M&M) A bag of M&Ms is dumped on the table and...
Q: Summarize below article in 5 to 7 lines. (Long Term interest rate) Managing Risks Associated...
Q: Summarize below article in 5 to 7 lines. (Long Term interest rate) Managing Risks Associated with the Future Course of Long-Term Interest Rates- As I noted when I began my remarks, one reason to focus on the timing and pace of a possible increase in long-term rates is that these outcomes may have implications for financial stability. Commentators have raised two broad concerns surrounding the outlook for long-term rates. To oversimplify, the first risk is that rates will remain...
Read The Question & Answer Give Your Opinion Do You Agree Or Disagree? Why Or Why...
Read The Question & Answer Give Your Opinion Do You Agree Or Disagree? Why Or Why Not? Quenstion: Why is it more difficult and riskier to collect receivables from a foreign purchaser? Answer: Collecting accounts receivable is a difficult task. Not doing background/credit checks leads to risk of non-payment when it comes to collecting from foreign countries. Since there is no personal contact, there is much less information available on the importer's creditworthiness and trustworthiness. Lastly, if collector is unable...
(Environmental Policy) There are two firms whose production generates wastewater. One unit of production Q generates...
(Environmental Policy) There are two firms whose production generates wastewater. One unit of production Q generates one unit of wastewater E. Firm 1's marginal revenue from production is:  MR1 = 10 - Q1; firm 2's marginal revenue from production is MR2 = 18 - Q2. The pollutants in the wastewater can be removed through the water treatment facilities. The two firms have different water treatment technologies. Firm 1's marginal treatment cost is: MTC1 = T1; firm 2's marginal treatment cost is...
PTL Club –The Harbinger of Things to Come? DISCUSSION QUESTIONS 1. Although audit reports should provide...
PTL Club –The Harbinger of Things to Come? DISCUSSION QUESTIONS 1. Although audit reports should provide assurance to investors and creditors that financial information presented is free of material misstatements and in accordance with GAAP, should audit reports be used to solicit investments, credit, or sales in a manner similar to Jim Bakker’s? How can a CPA firm prevent such behaviour? 2 During the trial, Mary K. Cline, senior auditor for Deloitte, Haskins and Sells stated: “Well, we made a...
For its first 8 years, Facebook, Inc., operated as a privately held corporation. The company had...
For its first 8 years, Facebook, Inc., operated as a privately held corporation. The company had relatively few shareholders and had no obligation to report its financial results to the public or to regulators such as the Securities and Exchange Commission (SEC), which allowed co-founder Mark Zuckerberg to focus his energy on building Facebook’s rapidly growing business. Just 6 years after its inception in Zuckerberg’s Harvard dorm room, Facebook’s user base surpassed the 500 million mark, and pressure mounted on...
Question 1 (1 point) [Question 1 Unsaved] One reason that people hold money is to try...
Question 1 (1 point) [Question 1 Unsaved] One reason that people hold money is to try to profit from changes in the prices of financial assets like stocks and bonds. This motive for holding money is called Question 1 options: A) transactions demand. B) precautionary demand. C) speculative demand. D) foreign-exchange demand. Question 2 (1 point) [Question 2 Unsaved] Which of the following causes the demand for money curve to slope downward? Question 2 options: A) Transactions demand. B) Precautionary...
Analyze about this Diversification- Auto Rental During the last meeting of your management team, the planning...
Analyze about this Diversification- Auto Rental During the last meeting of your management team, the planning officer presented a proposal for diversifying. It was to acquire a rental car agency at the smallest city you are currently serving. While there is a car rental agency located downtown at a service station and a locally owned taxi service serves the airport, there is no car rental agency serving the airport. Although the total passengers boarded daily there is modest, quite a...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT