Financial management chapter 2
Authored by Ánh Hoàng
Business
University
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26 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Homemade leverage is:
the incurrence of debt by a corporation in order to pay dividends to
shareholders
the exclusive use of debt to fund a corporate expansion project
the borrowing or lending of money by individual shareholders as a means of
adjusting their level of financial leverage
best defined as an increase in a firm's debt-equity ratio
the term used to describe the capital structure of a levered firm
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which one of the following states that the value of a firm is unrelated to the
firm's capital structure?
Capital Asset Pricing Model
M & M Proposition I
M& M Proposition II
Law of One Price
Efficient Markets Hypothesis
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which one of the following states that a firm's cost of equity capital is directly
and proportionally related to the firm's capital structure?
Capital Asset Pricing Model
M & M Proposition I
M & M Proposition II
Law of One Price
Efficient Markets Hypothesis
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which one of the following is the equity risk that is most related to the daily
operations of a firm?
market risk
systematic risk
extrinsic risk
business risk
financial risk
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which one of the following is the equity risk related to a firm's capital structure
policy?
market
systematic
extrinsic
business
financial
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Butter & Jelly reduced its taxes last year by $350 by increasing its interest
expense by $1,000. Which of the following terms is used to describe this tax
savings?
interest tax shield
interest credit
financing shield
current tax yield
tax-loss interest
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
The unlevered cost of capital refers to the cost of capital for a(n):
private entity
all-equity firm
governmental entity
private individual
corporate shareholder
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