Capital structure_TLe

The term "capital structure" refers to:

• long-term debt, preferred stock, and common stock equity

• current assets and current liabilities.

• total assets minus liabilities.

• shareholders' equity.

The Modigliani Miller theorem, or the MM theory, is known for _____.

• Profits

• Working Capital

• Capital structure

• Operations

The Modigliani-Miller theorem is disregarded by economists because

• It's outdated

• IT's unrealistic and euphoric

• IT has been conclusively proven wrong

• all above

Financial Leverage means

• Increase in total earnings per share in the company 

• Maximising equity 

• Minimising debts 

• The balance between equity and debt 

When is financial leverage profitable? 

• When debts are lesser than equity

• When debts and equity are in balance 

• When the company is growing exponentially

• When the cost of capital decreases 

What is leverage?

• The concept of leverage states that till a certain point debt is not considered to be full-fledged liability. 

• Leverage is the increase in revenue per share for relation. 

• Leverage is used to portray an ideal situation in the case of a capital structure

• Leverage is referred to as a particular technique that is said to use debt instead of fresh equity in the process of purchasing an asset.

"The market value of a company is calculated using its _____ and the risk of its underlying assets and that its value is ________ of the way it finances investments or distributes dividends"

• Earning power _ independent

• debt_independent

• Earning power _ Dependent

• Debt - dependent

The M&M theorem 2 states that ______ is directly proportional to the company's leverage level

• Cost of debt

• Cost of equity

• leverage

• market value

What is "Homemade Leverage"?

• The incurrence of debt by a corporation in order to pay dividends to shareholders

• The exclusive use of debt to fund a corporate expansion project

• The borrowing or lending of money by individual shareholders as a means of adjusting their level of financial leverage

• Best defined as an increase in a firm's debt-equity ratio

Which one of the following states that the value of a firm is unrelated to the firm's capital structure?

• CAPM

• M&M proposition 1

• M&M proposition 2

• Efficient markets hypothesis