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There are two companies,U and L,which are identical in every respect,except that U is financed entirely through common equity and L has $100,000 in debt at an interest rate of 16 percent.Both companies achieve annual net operating earnings of $45,000.Assume perfect markets and information,with no taxes and no bankruptcy costs.If the market capitalizes firm U at a rate of 10 percent,and the total market value of L is $500,000,is there an arbitrage opportunity available,and if so,what is the net gain?
Explicit Self-esteem
The conscious and deliberate evaluation of one's worth or value as an individual.
Reflected Glory
The phenomenon of basking in the success or positive attributes of another person or group to which one is connected, enhancing one's self-esteem.
Implicit Self-esteem
A form of self-esteem that is revealed by subconscious or automatic responses rather than conscious reflection.
Social Stigma
The disapproval of, or discrimination against, individuals or groups based on perceivable social characteristics that serve to distinguish them from other members of a society.
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