公司理财精要第十三章题库.doc

Chapter 13 Leverage and Capital Structure ? Multiple Choice Questions? 1.?The use of borrowing by an individual to adjust his or her overall exposure to financial leverage is referred to as:?A.?MM Proposition I.B.?capital restructuring.C.?homemade leverage.D.?MM Proposition II.E.?financial risk management. ? 2.?Which one of the following statements matches MM Proposition I??A.?The cost of equity capital has a positive linear relationship with a firms capital structure.B.?The dividends paid by a firm determine the firms value.C.?The cost of equity capital varies in response to changes in a firms capital structure.D.?The value of a firm is independent of the firms capital structure.E.?The value of a firm is dependent on the firms capital structure. ? 3.?Which one of the following states that a firms cost of equity capital is a positive linear function of the firms capital structure??A.?Static theory of capital structureB.?MM Proposition IC.?MM Proposition IID.?Homemade leverage theoryE.?WACC ? 4.?Which one of the following is the equity risk arising from the daily operations of a firm??A.?Strategic riskB.?Financial riskC.?Liquidity riskD.?Industry riskE.?Business risk ? 5.?Which one of the following is the equity risk arising from the capital structure selected by a firm??A.?Strategic riskB.?Financial riskC.?Liquidity riskD.?Industry riskE.?Business risk ? 6.?Paying interest reduces the taxes owed by a firm. Which one of the following terms applies to this relationship??A.?Static theory of interest ratesB.?MM Proposition IC.?Financial riskD.?Interest tax shieldE.?Homemade leverage ? 7.?Which one of the following is a direct bankruptcy cost??A.?Loss of customer goodwill resulting from a bankruptcy filingB.?Legal and accounting fees related to a bankruptcy proceedingC.?Management time spent on a bankruptcy proceedingD.?Any financial distress costE.?Costs a firm spends trying to avoid bankruptcy ? 8.?Which one of the following terms