corporation finance test bank chapter 16答案汇总Word格式.docx
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corporation finance test bank chapter 16答案汇总Word格式.docx
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CapitalAssetPricingModel
M&
MPropositionI
MPropositionII
LawofOnePrice
EfficientMarketsHypothesis
3.
Whichoneofthefollowingstatesthatafirm'
scostofequitycapitalisdirectlyandproportionallyrelatedtothefirm'
4.
Whichoneofthefollowingistheequityriskthatismostrelatedtothedailyoperationsofafirm?
marketrisk
systematicrisk
extrinsicrisk
businessrisk
financialrisk
5.
Whichoneofthefollowingistheequityriskrelatedtoafirm'
scapitalstructurepolicy?
market
systematic
extrinsic
business
financial
6.
Butter&
Jellyreduceditstaxeslastyearby$350byincreasingitsinterestexpenseby$1,000.Whichofthefollowingtermsisusedtodescribethistaxsavings?
interesttaxshield
interestcredit
financingshield
currenttaxyield
tax-lossinterest
7.
Theunleveredcostofcapitalreferstothecostofcapitalfora(n):
privateentity.
all-equityfirm.
governmentalentity.
privateindividual.
corporateshareholder.
8.
Theexplicitcosts,suchaslegalandadministrativeexpenses,associatedwithcorporatedefaultareclassifiedas_____costs.
flotation
issue
directbankruptcy
indirectbankruptcy
unlevered
9.
Thecostsincurredbyabusinessinanefforttoavoidbankruptcyareclassifiedas_____costs.
financialsolvency
capitalstructure
10.
Bydefinition,whichofthefollowingcostsareincludedintheterm"
financialdistresscosts"
?
I.directbankruptcycosts
II.indirectbankruptcycosts
III.directcostsrelatedtobeingfinanciallydistressed,butnotbankrupt
IV.indirectcostsrelatedtobeingfinanciallydistressed,butnotbankrupt
Ionly
IIIonly
IandIIonly
IIIandIVonly
I,II,III,andIV
11.
Thepropositionthatafirmborrowsuptothepointwherethemarginalbenefitoftheinteresttaxshieldderivedfromincreaseddebtisjustequaltothemarginalexpenseoftheresultingincreaseinfinancialdistresscostsiscalled:
thestatictheoryofcapitalstructure.
MPropositionI.
MPropositionII.
thecapitalassetpricingmodel.
theopenmarketstheorem.
12.
Whichoneofthefollowingisthelegalproceedingunderwhichaninsolventfirmcanbereorganized?
restructureprocess
bankruptcy
forcedmerger
legaltakeover
rightsoffer
13.
Abusinessfirmceasestoexistasagoingconcernasaresultofwhichoneofthefollowing?
divestiture
sharerepurchase
liquidation
reorganization
capitalrestructuring
14.
EdwardsFarmProductswasunabletomeetitsfinancialobligationsandwasforcedintousinglegalproceedingstorestructureitselfsothatitcouldcontinueasaviablebusiness.Theprocessthisfirmunderwentisknownasa:
merger.
repurchaseprogram.
liquidation.
reorganization.
divestiture.
15.
Theabsolutepriorityruledetermines:
whenafirmmustbedeclaredofficiallybankrupt.
howadistressedfirmisreorganized.
whichjudgeisassignedtoaparticularbankruptcycase.
howlongareorganizedfirmisallowedtoremainunderbankruptcyprotection.
whichpartiesreceivepaymentfirstinabankruptcyproceeding.
16.
Afirmshouldselectthecapitalstructurethat:
producesthehighestcostofcapital.
maximizesthevalueofthefirm.
minimizestaxes.
isfullyunlevered.
equatesthevalueofdebtwiththevalueofequity.
17.
Thevalueofafirmismaximizedwhenthe:
costofequityismaximized.
taxrateiszero.
leveredcostofcapitalismaximized.
weightedaveragecostofcapitalisminimized.
debt-equityratioisminimized.
18.
Theoptimalcapitalstructurehasbeenachievedwhenthe:
debt-equityratioisequalto1.
weightofequityisequaltotheweightofdebt.
costofequityismaximizedgivenapre-taxcostofdebt.
debt-equityratioissuchthatthecostofdebtexceedsthecostofequity.
debt-equityratioresultsinthelowestpossibleweightedaveragecostofcapital.
19.
AAToursiscomparingtwocapitalstructurestodeterminehowtobestfinanceitsoperations.Thefirstoptionconsistsofallequityfinancing.Thesecondoptionisbasedonadebt-equityratioof0.45.WhatshouldAAToursdoifitsexpectedearningsbeforeinterestandtaxes(EBIT)arelessthanthebreak-evenlevel?
Assumetherearenotaxes.
selecttheleverageoptionbecausethedebt-equityratioislessthan0.50
selecttheleverageoptionsincetheexpectedEBITislessthanthebreak-evenlevel
selecttheunleveredoptionsincethedebt-equityratioislessthan0.50
selecttheunleveredoptionsincetheexpectedEBITislessthanthebreak-evenlevel
cannotbedeterminedfromtheinformationprovided
20.
Youhavecomputedthebreak-evenpointbetweenaleveredandanunleveredcapitalstructure.Assumetherearenotaxes.Atthebreak-evenlevel,the:
firmisjustearningenoughtopayforthecostofthedebt.
firm'
searningsbeforeinterestandtaxesareequaltozero.
earningspersharefortheleveredoptionareexactlydoublethoseoftheunleveredoption.
advantagesofleverageexceedthedisadvantagesofleverage.
firmhasadebt-equityratioof.50.
21.
Whichoneofthefollowingstatementsiscorrectconcerningtherelationshipbetweenaleveredandanunleveredcapitalstructure?
Atthebreak-evenpoint,thereisnoadvantagetodebt.
TheearningspersharewillequalzerowhenEBITiszeroforaleveredfirm.
TheadvantagesofleverageareinverselyrelatedtothelevelofEBIT.
TheuseofleverageatanylevelofEBITincreasestheEPS.
EPSaremoresensitivetochangesinEBITwhenafirmisunlevered.
22.
JessicainvestedinQuantrostockwhenthefirmwasunlevered.Sincethen,Quantrohaschangeditscapitalstructureandnowhasadebt-equityratioof0.30.Tounleverherposition,Jessicaneedsto:
borrowsomemoneyandpurchaseadditionalsharesofQuantrostock.
maintainhercurrentequitypositionasthedebtofthefirmdidnotaffectherpersonally.
sellsomesharesofQuantrostockandholdtheproceedsincash.
sellsomesharesofQuantrostockandloanoutthesaleproceeds.
createapersonaldebt-equityratioof0.30.
23.
Whichoneofthefollowingmakesthecapitalstructureofafirmirrelevant?
taxes
100percentdividendpayoutratio
debt-equityratiothatisgreaterthan0butlessthan1
homemadeleverage
24.
MPropositionIwithnotaxsupportstheargumentthat:
businessriskdeterminesthereturnonassets.
thecostofequityrisesasleveragerises.
thedebt-equityratioofafirmiscompletelyirrelevant.
afirmshouldborrowmoneytothepointwherethetaxbenefitfromdebtisequaltothecostoftheincreasedprobabilityoffinancialdistress.
homemadeleverageisirrelevant.
25.
Theconceptofhomemadeleverageismostassociatedwith:
MPropositionIwithnotax.
MPropositionIIwithnotax.
MPropositionIwithtax.
MPropositionIIwithtax.
statictheoryproposition.
26.
WhichofthefollowingstatementsarecorrectinrelationtoM&
MPropositionIIwithnotaxes?
I.Therequiredreturnonassetsisequaltotheweightedaveragecostofcapital.
II.Financialriskisdeterminedbythedebt-equityratio.
III.Financialriskdeterminesthereturnonassets.
IV.Thecostofequitydeclineswhentheamountofleverageusedbyafirmrises.
IandIIIonly
IIandIVonly
IandIVonly
27.
MPropositionIIisthepropositionthat:
thecapitalstructureofafirmhasnoeffectonthefirm'
svalue.
thecostofequitydependsonthereturnondebt,thedebt-equityratio,andthetaxrate.
afirm'
scostofequityisalinearfunctionwithaslopeequalto(RA-RD).
thecostofequityisequivalenttotherequiredrateofreturnonafirm'
sassets.
thesizeofthepiedoesnotdependonhowthepieissliced.
28.
Thebusinessriskofafirm:
dependsonthefirm'
slevelofunsystematicrisk.
isinverselyrelatedtotherequiredreturnonthefirm'
isdependentupontherelativeweightsofthedebtandequityusedtofinancethefirm.
hasapositiverelationshipwiththefirm'
scostofequity.
hasnorelationshipwiththerequiredreturnonafirm'
sassetsaccordingtoM&
29.
Whichofthefollowingstatementsrelatedtofinancialriskarecorrect?
I.Financialriskistheriskassociatedwiththeuseofdebtfinancing.
II.Asfinancialriskincreasessotoodoesthecostofequity.
III.Financialriskiswhollydependentuponthefinancial
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