week 8 final exam.docx - Question 1 of 40 2.5 2.5 Points In the absence of taxes MM argues that A no one capital structure for a firm is superior to any

week 8 final exam.docx - Question 1 of 40 2.5 2.5 Points In...

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Question 1 of 402.5/ 2.5 PointsIn the absence of taxes, MM argues thatA. no one capital structure for a firm is superior to any other capital structure for that firm.B. the cost of equity for a levered firm is equal to the firm's unlevered WACC.C. homemade leverage is insufficient to offset a firm's use of leverage.D. the value of a levered firm exceeds the value of the unlevered firm.E. the cost of equity decreases as the debt-equity ratio increases.Question 2 of 402.5/ 2.5 PointsWhat is the length of the SEC registration waiting period?A. 10 days
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B. 45 daysC. 20 daysD. 90 daysE. 180 daysQuestion 3 of 402.5/ 2.5 PointsWhich one of the following is a source of cash?A. An increase in inventoryB. An increase in fixed assetsC. A decrease in long-term debt
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D. The payment of a cash dividendE. A decrease in accounts receivableQuestion 4 of 402.5/ 2.5 PointsWhich one of the following projects is most apt to be financed with venture capital?A. Seasonal merchandise for a major retailerB. New product for an international manufacturing companyC. Domestic outlet for a large global importerD. Additional warehouse space for a profitable trucking firmE. Prototype for a newly patented tool by an individual inventor
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Question 5 of 400.0/ 2.5 PointsIn a true merger, not a consolidation, the acquirerA. and the target firm become a new firm with a new name.B. accepts the responsibility for the debts of the target firm.C. ceases to exist as a separate firm.D. obtains only the assets of the target firm.E. is totally absorbed by the acquired firm.Question 6 of 402.5/ 2.5 PointsManagers should select the capital structure that
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A. maximizes the value of the firm.B. has no debt.C. is fully levered.D. minimizes taxes.E. produces the highest current level of net income.Question 7 of 402.5/ 2.5 PointsMM Proposition I, with tax, supports the theory thatA. the value of an unlevered firm is equal to the value of a levered firm plus the interest tax shield.B. the value of a firm is inversely related to the amount of leverage used by the firm.
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C. there is a positive linear relationship between the debt-to-equity ratio and firm value.D. a firm's cost of capital is the same regardless of the mix of debt and equity used by the firm.E. a firm's weighted average cost of capital increases as the debt-equity ratio of the firm increases.Question 8 of 402.5/ 2.5 PointsThe argument that selling stock involves too much leeway is theA. primary argument for implementing homemade dividends.B. primary argument against homemade dividends.C. principal reason firms do reverse stock splits.
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D. behavioral finance argument in favor of high dividends.
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