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