Distinguish between the concepts of the maturity-risk premium and the liquidity-risk premium
What will be an ideal response?
Maturity-risk premium is the additional return required by investors in longer-term securities to compensate them for
greater risk of price fluctuations on those securities caused by interest rate changes.
Liquidity-risk premium is the additional return required by investors for securities that cannot be quickly converted
into cash at a reasonably predictable price.
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The marketing of services _______________ the marketing of industrial products.
A. is less difficult than B. is the same as C. requires more adaptation than D. shares a complexity level with
Firm M's earnings and stock price tend to move up and down with other firms in the S&P 500, while Firm W's earnings and stock price move counter cyclically with M and other S&P companies. Both M and W estimate their costs of equity using the CAPM, they have identical market values, their standard deviations of returns are identical, and they both finance only with common equity. Which of the following statements is CORRECT?
A. M should have the lower WACC because it is like most other companies, and investors like that fact. B. M and W should have identical WACCs because their risks as measured by the standard deviation of returns are identical. C. If M and W merge, then the merged firm MW should have a WACC that is a simple average of M's and W's WACCs. D. Without additional information, it is impossible to predict what the merged firm's WACC would be if M and W merged. E. Since M and W move counter cyclically to one another, if they merged, the merged firm's WACC would be less than the simple average of the two firms' WACCs.
Landfall ServiceLandfall Service is a lawn furniture company that has been around for many years. It is known for its ability to produce furniture more efficiently than any other company in the nation. In truth, no other companies in any other nation come close. Landfall Service has shipped many of its products internationally. In fact, 80 percent of its profits come from international sales. However, the Italian government has imposed a tax on imported furniture items to protect local companies. The Brazilian government, on the other hand, has imposed taxes on Landfall Service products due to the government wanting a piece of the pie.Landfall Service initially thought that these taxes were unfair because it was being singled out. However, after Landfall Service contacted the organization
that had the power to mediate this situation, the furniture company realized that the taxation it was subjected to was legal and that there was nothing it could do about it. ? Refer to Landfall Service. What type of tax has the Italian government imposed on the company? A. Export duty B. Embargo C. Revenue tariff D. Protective tariff E. Nontariff barrier
If P(A) = 0.25 and P(B) = 0.65, then P(A and B) is:
a. 0.25 b. 0.40 c. 0.90 d. cannot be determined from the information given