Skip to ContentGo to accessibility pageKeyboard shortcuts menu
OpenStax Logo
Principles of Finance

Review Questions

Principles of FinanceReview Questions
1 .
Why does a company’s capital have a cost?
2 .
Why is the rate that debt holders require to entice them to lend money to a company different from the company’s effective cost of debt capital?
3 .
Assume that the corporate tax rate is 21%. Congress is discussing increasing the corporate tax rate to 32%. How might this change the capital structures that companies choose?
4 .
Describe the order of claimants and how it impacts the returns that various providers of capital require to entice them to provide funding to a company.
5 .
Explain what is meant by trade-off theory.
PreviousNext
Order a print copy
Citation/Attribution

This book may not be used in the training of large language models or otherwise be ingested into large language models or generative AI offerings without OpenStax's permission.

Want to cite, share, or modify this book? This book uses the Creative Commons Attribution License and you must attribute OpenStax.

Attribution information
  • If you are redistributing all or part of this book in a print format, then you must include on every physical page the following attribution:
    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters
  • If you are redistributing all or part of this book in a digital format, then you must include on every digital page view the following attribution:
    Access for free at https://openstax.org/books/principles-finance/pages/1-why-it-matters
Citation information

© Jan 8, 2024 OpenStax. Textbook content produced by OpenStax is licensed under a Creative Commons Attribution License . The OpenStax name, OpenStax logo, OpenStax book covers, OpenStax CNX name, and OpenStax CNX logo are not subject to the Creative Commons license and may not be reproduced without the prior and express written consent of Rice University.