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Chapter 11
1. From what sources can a company raise capital? Do these different sources of capital all charge the same rate? Why or why not?
2. When calculating the cost of capital, why is it that the company only adjusts the cost of debt for taxes?
3. Why not just use a single WACC for all company projects?
Chapter 15
1. What is the difference between an angel investor and a venture capitalist? What event do these investors want to see happen? Why?
2. What is commercial paper? Why does it not need SEC approval?
3. What is the difference between Chapter 7 and Chapter 11 bankruptcies? Why might Chapter 11 be better for claimants than Chapter 7?
Chapter 16
1. What is the advantage of financial leverage, the degree to which a firm or individual uses borrowed money to make money?
2. What is asymmetric information? How does it affect the prioritization of financing sources under the pecking order hypothesis?
