Chapter 13

M&M Proposition II, without taxes, states that the:

Which one of the following statements concerning financial leverage is correct?

The use of borrowing by an individual to adjust his or her overall exposure to financial leverage is referred to as:

Which of the following will increase the value of a levered firm according to M&M Proposition I, with taxes? I. Decrease in the amount of the debt II. Increase in the value of the unleveled firm III. Decrease in the tax rate IV. Increase in the interest rate on the debt

Which one of the following statements related to the static theory of capital structure is correct?

Paying interest reduces the taxes owed by a firm. Which one of the following terms applies to this relationship?

Which on of the following is a key provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005?

Greenwood Motels has filed a petition for bankruptcy but hopes to continue its operations both durning and after the bankruptcy process. Which one of the following terms best applies to this situation?

Which one of the following supports the theory that the value of a firm increases as the firm's level of debt increases?

Assume you are comparing two firms that are identical in every aspect, except one is levered and one is unleveled. Which one of the following statements is correct regarding these two firms?

Assume both corporates taxes and financial distress cost apply to a firm. Given this the statics theory of capital structure illustrates that:

Which one of the following terms inclusive of both direct and indirect bankruptcy cost?

Which of the following statements is correct?

In the process of liquidation, some types of claims receive preference over other claims. Which one of the following determines which type of claim is paid first?

What is the core principle of M&M Prop I?

Prepack

Business risk

T.L.C Enterprise just revised its capital structure from a debt- equity ratio of 0.30 to a debt- equity ratio of 0.45. The firm's shareholders who prefer the old capital structure should:

Which of the following statements correctly relate to M&M Proposition I, with taxes? I. Debt decrease the value of a firm II. The levered value of a firm exceeds the firm's unleveled value III. The weighted average cost of capital (WAAC) is constant. IV. The optimal capital structure is zero debt

Which one of the following conditions exists at the point where a firm maximizes it value?

Which one of the following is minimized when the value of a firm is maximized?

Which one of the following statements concerning financial leverage is correct?

Which one of the following statements is the core principle of M&M Proposition I, without taxes?

Which of the following will generally receive the highest priority in a bankruptcy liquidation, assuming the absolute priority rule is followed?