Answer Question Essay Example | Topics and Well Written Essays - 750 words

Answer Question - Essay Example The FCFE approach pertains to the common stockholders. Unlike the FCFF, which incorporates the EBITDA, the ownership perspective holds that neither does EBITDA account for different capital frameworks nor does it account for cash flow from bondholders. Common stockholders argue that EBITDA fails to allow for adjustments from reinvesting cash flows to improve the value of the company in the long-term. Many financial analysts utilize historical data to establish the ex ante risk premium. Such an approach to predict future performance of stocks and bonds raises some validity concerns within the commercial markets. Besides being difficult to establish the data series and time period to use, some analysts argue that historical data is ambiguous and is not a legitimate method to forecast future returns. In addition, historical data sets are viewed as being independent to each other and are equally distributed over the time period. However, returns on investments are negatively correlated to each other. Statistical Stationarity: The previous financial performance may not indicate the future financial performance in a financial market. For example, in the U.S., changes in the stock market in the 20th century indicate a stationery return series. a. When the Return on Capital (ROC) reduces, the Return on Equity (ROE) significantly reduces, ceteris paribus. Shareholder equity forms part of investment capital. If the capital invested fails to realize the forecasted capital gains, the net income attributable to share holder equity significantly reduces. b. A decrease in leverage increases the return on equity. Reduced long-term debt stimulates capital investments based on shareholders’ equity; that is, low long-term debt induces investments based on shareholders’ equity. Capital investments based on shareholders’ equity would increase the return

Answer Questions Assignment Example | Topics and Well Written Essays - 250 words - 5

Answer Questions - Assignment Example Preventing the development of addiction in young people is essential. Family involvement is important for the families who have an addictive problem. Disclosure among a parent with an addictive problem to the child is essential as well as letting the child know that addiction is a family problem and it runs in the family, thus the child will be aware of their chances of being an addict. In schools, it is important to educate the children on the consequences that result from abusing drugs such as addiction so that the young people can be aware. Teachers and parents should be involved in childcare to discover any abnormal behaviors of the child to offer corrective measures as such behaviors result due to instances of drug abuse (Vida &Rasa, 2011). Children from alcoholic’s families have a four-ten times risk of becoming alcoholics themselves. Hereditary is a major predisposing factors to drug addiction. It is important for such parents to discuss and disclose their addiction problems to their children. Despite the problems being faced by addict parents, the child needs to be shown that they are loved. They need to know that it is not their fault that the parent has an addictive problem. The parent needs to involve the child in their own program of rehabilitation by assuring them that they will do everything to get out of the problem. It is good to discuss with the child about drug addiction as it is hereditary so that the child may avoid any instances. In so doing, young people will be aware of drug addiction thus will be very cautious not to develop an addiction problem. Often, alcoholism and other drug addictions are a family legacy. The family (parents) has the major responsibility to provide support for the alcoholic children or drug addicts. Treatment period brings the family together enhancing and opening up communication within the family structure. The parents needs to offer physical, emotional as well as