FNAN522-1SP11-M2_Answer_Key - ANSWER KEY Midterm 2 Advanced...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 ANSWER KEY Midterm 2 Advanced Financial Management and Policy FNAN522-1SP11 Moody Hall, Room 127 Thursday, March 3, 2011 3:00 P.M. to 5:30 P.M. 80 Points Total 75 Minutes 16 Questions All questions are worth 5 points. Please read the following instructions first: DO NOT TURN OVER THIS PAGE UNTIL YOU ARE INSTRUCTED TO DO SO. Write your name, the date, and the subject on the bubble sheet. Only answers that are clearly recorded on the bubble sheet will counted towards you mark. There is only one correct answer per question. You may only give one answer per question. It is strongly recommended that you bubble your responses clearly in pencil. This will allow you to erase answers if you change your mind. Nevertheless, unclear or multiple marks on a single question will result in no points. No credit will be given for scrap work. Partial credit will NOT be given. Hand in your bubble sheet to the instructor when you are finished. You will NOT be allowed back into the test room once you leave.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Multiple Choice Questions Instructions: To answer these questions, bubble in the letter that corresponds with the best answer for each question on you answer key. 1. Modigliani and Miller's Proposition I (without taxes) states that: A. The market value of any firm is independent of its capital structure B. The market value of a firm's debt is independent of its capital structure C. The market value of a firm's common stock is independent of its capital structure D. Firms should not borrow p. 421 2. Choose the roman numerals that would help an investor undo the effect of leverage in the firms’ capital structure. That is, what actions would allow the investor to hold an equivalent stream of cash flows to an unlevered firm? Suppose that the levered firm has issued risk-free debt.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

FNAN522-1SP11-M2_Answer_Key - ANSWER KEY Midterm 2 Advanced...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online