Quiz Ch 16 – Leverage Effects on Shareholders’ Expected Return and Risk
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What is the impact of leverage on shareholders’ expected return and risk?
What is the impact of leverage on shareholders’ expected return and risk?
When corporate taxes and the cost of financial distress are considered, the market value of a firm is determined by what relationship between the value of the all-equity firm, the present value of the tax shield, and the costs of financial distress?
How can a firm maximize its value in a setting with corporate taxes and no financial distress?
How does MM Proposition I describe the impact of which factor on a firm’s value?
Which statement is in accordance with MM Proposition I when taxes are NOT considered?
According to MM’s proposition II without taxes, what does it assert?
How can an investor counteract an adjustment when a firm raises its debt ratio from 50% to 60% without taxes?
In the trade-off theory of capital structure, what characterizes the optimal capital structure for any firm?
According to the pecking-order theory, how is the ranking of financing preferences typically predicted, from most preferred to least preferred?
What does MM Proposition I without taxes declare?