Quiz
Lecture 2- Gearing (part 1)
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1Modigliani-Miller Proposition I (no taxes) states [blank_start]value[blank_end] of [blank_start]levered firm[blank_end] is [blank_start]same[blank_end] as [blank_start]value[blank_end] of [blank_start]unlevered firm[blank_end]
- Avalue
- Blevered firm
- Csame
- Dvalue
- Eunlevered firm
2One assumption of Modigliani-Miller Proposition I (no taxes) is [blank_start]individuals[blank_end] can [blank_start]borrow[blank_end] as [blank_start]cheaply[blank_end] as [blank_start]corporations[blank_end]
- Aindividuals
- Bborrow
- Ccheaply
- Dcorporations
3Another assumption of Modigliani-Miller Proposition I (no taxes) is [blank_start]capital markets[blank_end] are [blank_start]efficient[blank_end]
- Acapital markets
- Befficient
4Third assumption of Modigliani-Miller Proposition I (no taxes) is [blank_start]no taxes[blank_end]
- Ano taxes
5Fourth assumption of Modigliani-Miller Proposition I (no taxes) is [blank_start]no transaction costs[blank_end]
- Ano transaction costs
6Fifth assumption of Modigliani-Miller Proposition I (no taxes) is [blank_start]no risk[blank_end] of [blank_start]bankruptcy[blank_end]
- Ano risk
- Bbankruptcy
7Homemade leverage is use of [blank_start]personal borrowing[blank_end] to change [blank_start]overall[blank_end] amount of [blank_start]financial leverage[blank_end] to which the [blank_start]individual[blank_end] is exposed
- Apersonal borrowing
- Boverall
- Cfinancial leverage
- Dindividual
8Modigliani-Miller Proposition II (no taxes) states [blank_start]cost of equity[blank_end] [blank_start]rises[blank_end] with [blank_start]leverage[blank_end] because [blank_start]risk to equity[blank_end] [blank_start]rises[blank_end] with [blank_start]leverage[blank_end]
- Acost of equity
- Brises
- Cleverage
- Drisk to equity
- Erises
- Fleverage
9Business risk is [blank_start]equity risk[blank_end] that comes from [blank_start]nature[blank_end] of firm’s [blank_start]operating activities[blank_end]
- Aequity risk
- Bnature
- Coperating activities
10Financial risk is [blank_start]equity risk[blank_end] that comes from [blank_start]financial policy[blank_end] (capital structure) of [blank_start]firm[blank_end]
- Aequity risk
- Bfinancial policy
- Cfirm
11Modigliani-Miller Proposition I (with taxes) states [blank_start]value[blank_end] of [blank_start]levered firm[blank_end] is [blank_start]greater than[blank_end] [blank_start]unlevered firm[blank_end] by [blank_start]present value[blank_end] of [blank_start]tax shield[blank_end] from debt
- Avalue
- Blevered firm
- Cgreater than
- Dunlevered firm
- Epresent value
- Ftax shield
12Modigliani-Miller Proposition II (with taxes) states [blank_start]cost of equity[blank_end] [blank_start]rises[blank_end] with [blank_start]leverage[blank_end] because [blank_start]risk[blank_end] to [blank_start]equity rises[blank_end] with [blank_start]leverage[blank_end]
- Acost of equity
- Brises
- Cleverage
- Drisk
- Eequity rises
- Fleverage
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- User has deleted their subject information Quiz on Lecture 2- Gearing (part 1), created by Deleted user on 12/07/2021.
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- Deleted user
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- Created on 12 Jul 2021 · updated on 12 Jul 2021
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