FIN 571 NERD Education Specialist /fin571nerd.com FIN 571 NERD Education Specialist /fin571nerd.com | Page 54

FIN 571 Week 5 DQ 1
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Because the weighted average is always a correct measure of a
required return, why do firms not create securities to finance each
project and offer them in the capital market in order to accurately
determine the required return for the project?
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FIN 571 Week 5 DQ 2
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The development of the new issue junk bond market had important
implications for capital structure choice. The existence of a viable
junk bond market means that firms can comfortably maintain higher
degrees of leverage than they could prior to the development of this
market. Do you agree or disagree? Justify your answer.
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