Which of the Following Stock Mutual Funds Are More Established

question 54

Multiple Choice

Which of the following stock mutual funds are more established than small-cap firms,but may have less growth potential?

• A)Equity income
• B)Sector funds
• C)Mid-size capitalization
• D)Balanced growth and income

Evaluate the effects of leverage on return on equity (ROE) and the risk-return trade-off for shareholders.

Calculate and analyze the weighted average cost of capital (WACC) and its components.

Understand the effects of leverage on a firm's capital structure and shareholder's required returns.

Recognize the implications of capital structure decisions on a firm's valuation and the cost of capital.

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Definitions:

Legal Capital Approach

A method of accounting that maintains capital at a certain legal minimum to protect creditors.

Ownership Equity

The owners' residual interest in the assets of a company after deducting liabilities, also known as shareholders' equity or stockholders' equity.

Date of Record

The specific date set by a corporation on which the company determines the shareholders eligible to receive dividends or other distributions.

Stock Split

A stock split is a corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares.