capita strcture leverage.docx
- 文档编号:11358061
- 上传时间:2023-02-28
- 格式:DOCX
- 页数:43
- 大小:36.86KB
capita strcture leverage.docx
《capita strcture leverage.docx》由会员分享,可在线阅读,更多相关《capita strcture leverage.docx(43页珍藏版)》请在冰豆网上搜索。
capitastrctureleverage
CHAPTER13
CAPITALSTRUCTUREANDLEVERAGE
(Difficulty:
E=Easy,M=Medium,andT=Tough)
MultipleChoice:
Conceptual
Easy:
BusinessriskAnswer:
cDiff:
E
.Adecreaseinthedebtratiowillgenerallyhavenoeffecton
.
a.Financialrisk.
b.Totalrisk.
c.Businessrisk.
d.Marketrisk.
e.Noneoftheaboveiscorrect.(Itwillaffecteachtypeofriskabove.)
BusinessriskAnswer:
dDiff:
E
.Businessriskisconcernedwiththeoperationsofthefirm.Whichofthefollowingisnotassociatedwith(ornotapartof)businessrisk?
a.Demandvariability.
b.Salespricevariability.
c.Theextenttowhichoperatingcostsarefixed.
d.Changesinrequiredreturnsduetofinancingdecisions.
e.Theabilitytochangepricesascostschange.
BusinessriskAnswer:
dDiff:
EN
.Whichofthefollowingfactorswouldaffectacompany’sbusinessrisk?
a.Thelevelofuncertaintyregardingthedemandforitsproduct.
b.Thedegreeofoperatingleverage.
c.Theamountofdebtinitscapitalstructure.
d.Statementsaandbarecorrect.
e.Allofthestatementsabovearecorrect.
BusinessandfinancialriskAnswer:
dDiff:
E
.Whichofthefollowingstatementsismostcorrect?
a.Afirm’sbusinessriskissolelydeterminedbythefinancialcharacteristicsofitsindustry.
b.Thefactorsthataffectafirm’sbusinessriskaredeterminedpartlybyindustrycharacteristicsandpartlybyeconomicconditions.Unfortunately,theseandotherfactorsthataffectafirm’sbusinessriskarenotsubjecttoanydegreeofmanagerialcontrol.
c.Oneofthebenefitstoafirmofbeingatornearitstargetcapitalstructureisthatfinancialflexibilitybecomesmuchlessimportant.
d.Thefirm’sfinancialriskmayhavebothmarketriskanddiversifiableriskcomponents.
e.Noneofthestatementsaboveiscorrect.
OptimalcapitalstructureAnswer:
eDiff:
E
.Whichofthefollowingstatementsismostcorrect?
a.Asarule,theoptimalcapitalstructureisfoundbydeterminingthedebt-equitymixthatmaximizesexpectedEPS.
b.TheoptimalcapitalstructuresimultaneouslymaximizesEPSandminimizestheWACC.
c.Theoptimalcapitalstructureminimizesthecostofequity,whichisanecessaryconditionformaximizingthestockprice.
d.Theoptimalcapitalstructuresimultaneouslyminimizesthecostofdebt,thecostofequity,andtheWACC.
e.Noneofthestatementsaboveiscorrect.
OptimalcapitalstructureAnswer:
cDiff:
E
.Fromtheinformationbelow,selecttheoptimalcapitalstructureforMinnowEntertainmentCompany.
a.Debt=40%;Equity=60%;EPS=$2.95;Stockprice=$26.50.
b.Debt=50%;Equity=50%;EPS=$3.05;Stockprice=$28.90.
c.Debt=60%;Equity=40%;EPS=$3.18;Stockprice=$31.20.
d.Debt=80%;Equity=20%;EPS=$3.42;Stockprice=$30.40.
e.Debt=70%;Equity=30%;EPS=$3.31;Stockprice=$30.00.
OptimalcapitalstructureAnswer:
eDiff:
E
.Whichofthefollowingstatementsbestdescribestheoptimalcapitalstructure?
a.Theoptimalcapitalstructureisthemixofdebt,equity,andpreferredstockthatmaximizesthecompany’searningspershare(EPS).
b.Theoptimalcapitalstructureisthemixofdebt,equity,andpreferredstockthatmaximizesthecompany’sstockprice.
c.Theoptimalcapitalstructureisthemixofdebt,equity,andpreferredstockthatminimizesthecompany’sweightedaveragecostofcapital(WACC).
d.Statementsaandbarecorrect.
e.Statementsbandcarecorrect.
TargetcapitalstructureAnswer:
eDiff:
E
.Thefirm’stargetcapitalstructureisconsistentwithwhichofthefollowing?
a.Maximumearningspershare(EPS).
b.Minimumcostofdebt(kd).
c.Minimumrisk.
d.Minimumcostofequity(ks).
e.Minimumweightedaveragecostofcapital(WACC).
LeverageandcapitalstructureAnswer:
dDiff:
E
.Whichofthefollowingislikelytoencourageacompanytousemoredebtinitscapitalstructure?
a.Anincreaseinthecorporatetaxrate.
b.Anincreaseinthepersonaltaxrate.
c.Adecreaseinthecompany’sdegreeofoperatingleverage.
d.Statementsaandcarecorrect.
e.Allofthestatementsabovearecorrect.
LeverageandcapitalstructureAnswer:
eDiff:
E
.Whichofthefollowingstatementsismostcorrect?
a.Areductioninthecorporatetaxrateislikelytoincreasethedebtratiooftheaveragecorporation.
b.Anincreaseinthepersonaltaxrateislikelytoincreasethedebtratiooftheaveragecorporation.
c.Ifchangesinthebankruptcycodemakebankruptcylesscostlytocorporations,thenthiswouldlikelyreducethedebtratiooftheaveragecorporation.
d.Allofthestatementsabovearecorrect.
e.Noneofthestatementsaboveiscorrect.
LeverageandcapitalstructureAnswer:
eDiff:
E
.Whichofthefollowingstatementsislikelytoencourageafirmtoincreaseitsdebtratioinitscapitalstructure?
a.Itssalesbecomelessstableovertime.
b.Itscorporatetaxratedeclines.
c.Managementbelievesthatthefirm’sstockisovervalued.
d.Statementsaandbarecorrect.
e.Noneofthestatementsaboveiscorrect.
LeverageandcapitalstructureAnswer:
aDiff:
E
.Whichofthefollowingfactorsislikelytoencourageacorporationtoincreasetheproportionofdebtinitscapitalstructure?
a.Anincreaseinthecorporatetaxrate.
b.Anincreaseinthepersonaltaxrate.
c.Anincreaseinthecompany’sdegreeofoperatingleverage.
d.Thecompany’sassetsbecomelessliquid.
e.Anincreaseinexpectedbankruptcycosts.
LeverageandcapitalstructureAnswer:
eDiff:
E
.Whichofthefollowingwouldincreasethelikelihoodthatacompanywouldincreaseitsdebtratioinitscapitalstructure?
a.Anincreaseincostsincurredwhenfilingforbankruptcy.
b.Anincreaseinthecorporatetaxrate.
c.Anincreaseinthepersonaltaxrate.
d.Adecreaseinthefirm’sbusinessrisk.
e.Statementsbanddarecorrect.
LeverageandcapitalstructureAnswer:
aDiff:
EN
.Whichofthefollowingfactorsislikelytoencourageacompanytoincreaseitsdebtratio?
a.Anincreaseinthecorporatetaxrate.
b.Anincreaseinthepersonaltaxrate.
c.Itsassetsbecomelessliquid.
d.Bothstatementsaandcarecorrect.
e.Allofthestatementsabovearecorrect.
LeverageandcapitalstructureAnswer:
cDiff:
EN
.JonesCo.currentlyis100percentequityfinanced.Thecompanyisconsideringchangingitscapitalstructure.Morespecifically,Jones’CFOisconsideringarecapitalizationplaninwhichthefirmwouldissuelong-termdebtwithayieldof9percentandusetheproceedstorepurchasecommonstock.Therecapitalizationwouldnotchangethecompany’stotalassetsnorwoulditaffectthecompany’sbasicearningpower,whichiscurrently15percent.TheCFOestimatesthattherecapitalizationwillreducethecompany’sWACCandincreaseitsstockprice.Whichofthefollowingisalsolikelytooccurifthecompanygoesaheadwiththeplannedrecapitalization?
a.Thecompany’snetincomewillincrease.
b.Thecompany’searningspersharewilldecrease.
c.Thecompany’scostofequitywillincrease.
d.Thecompany’sROAwillincrease.
e.Thecompany’sROEwilldecrease.
LeverageandcapitalstructureAnswer:
eDiff:
EN
.Whichofthefollowingstatementsismostcorrect?
a.Whenacompanyincreasesitsdebtratio,thecostsofbothequityanddebtcapitalincrease.Therefore,theweightedaveragecostofcapital(WACC)mustalsoincrease.
b.Thecapitalstructurethatmaximizesstockpriceisgenerallythecapitalstructurethatalsomaximizesearningspershare.
c.Sincedebtfinancingischeaperthanequityfinancing,increasingacompany’sdebtratiowillalwaysreducethecompany’sWACC.
d.Thecapitalstructurethatmaximizesstockpriceisgenerallythecapitalstructurethatalsomaximizesthecompany’sWACC.
e.Noneofthestatementsaboveiscorrect.
LeverageandcapitalstructureAnswer:
cDiff:
E
.Whichofthefollowingstatementsismostcorrect?
a.Whenacompanyincreasesitsdebtratio,thecostsofequityanddebtcapitalbothincrease.Therefore,theweightedaveragecostofcapital(WACC)mustalsoincrease.
b.Thecapitalstructurethatmaximizesstockpriceisgenerallythecapitalstructurethatalsomaximizesearningspershare.
c.Allelseequal,anincreaseinthecorporatetaxratewouldtendtoencourageacompanytoincreaseitsdebtratio.
d.Statementsaandbarecorrect.
e.Statementsaandcarecorrect.
CapitalstructureandWACCAnswer:
eDiff:
E
.Whichofthefollowingstatementsismostcorrect?
a.Sincedebtfinancingraisesthefirm’sfinancialrisk,increasingacompany’sdebtratiowillalwaysincreasethecompany’sWACC.
b.Sincedebtfinancingischeaperthanequityfinancing,increasingacompany’sdebtratiowillalwaysreducethecompany’sWACC.
c.Increasingacompany’sdebtratiowilltypicallyreducethemarginalcostsofbothdebtandequityfinancing;however,itstillmayraisethecompany’sWACC.
d.Statementsaandcarecorrect.
e.Noneofthestatementsaboveiscorrect.
Capitalstructure,ROA,andROEAnswer:
dDiff:
E
.RidgefieldEnterpriseshastotalassetsof$300million.Thecompanycurrentlyhasnodebtinitscapitalstructure.Thecompany’sbasicearningpoweris15percent.Thecompanyiscontemplatingarecapitalizationwhereitwillissuedebtat10percentandusetheproceedstobuybacksharesofthecompany’scommonstock.Ifthecompanyproceedswiththerecapitali-zationitsoperatingincome,totalassets,andtaxratewillremainthesame.Whichofthefollowingwilloccurasaresultoftherecapitalization?
a.Thecompany’sROAwilldecline.
b.Thecompany’sROEwillincrease.
c.Thecompany’sbasicearningpowerwilldecline.
d.Statementsaandbarecorrect.
e.Allofthestatementsabovearecorrect.
- 配套讲稿:
如PPT文件的首页显示word图标,表示该PPT已包含配套word讲稿。双击word图标可打开word文档。
- 特殊限制:
部分文档作品中含有的国旗、国徽等图片,仅作为作品整体效果示例展示,禁止商用。设计者仅对作品中独创性部分享有著作权。
- 关 键 词:
- capita strcture leverage