If the Value of a Levered Firm Is $4,000,000, Then

question 85

Multiple Choice

If the value of a levered firm is $4,000,000, then the value of the same firm yet all-equity financed is:

• A)Less than $4,000,000
• B)Less than $4,500,000
• C)Less than $5,500,000
• D)Less than $6,000,000

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Definitions:

Dividend Yield

A metric that reveals the annual dividend payments of a company as a proportion of its current stock price.

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually without voting rights.

Capital Gains Yield

Capital gains yield is the rise in price of an investment or asset, expressed as a percentage of the initial purchase price.

One-year Return

The total percentage return on an investment over a period of one year.