FINC 600 Week 8 Practice Quiz APU

1. Indirect costs of bankruptcy are borne principally by:

2. Which of the following lists events in the chronological order from earliest to latest?

3. Dividends are decided by:

I) The managers of a firm

II) The government

III) The board of directors

4. Discuss some examples of the conflicts of interest that may arise between bondholders and stockholders when a firm is in financial distress.

5. The main advantage of debt financing for a firm is:

I) no SEC registration is required for bond issue

II) interest expense of a firm is tax deductible

III) unlevered firms have higher value than levered firms

6. Capital structure of the firm can be defined as:

I) the firm ' s debt-equity ratio

II) the firm ' s mix of different securities used to finance assets

III) the market imperfection that the firm ' s manager can exploit