Podcast
Questions and Answers
An increase in the general level of interest rates can lead to a decrease in the market value of a firm's debt.
An increase in the general level of interest rates can lead to a decrease in the market value of a firm's debt.
True (A)
Incurring high profits can lead to a decrease in a firm's book value equity.
Incurring high profits can lead to a decrease in a firm's book value equity.
False (B)
A firm's capital structure can be affected by changes in its default risk.
A firm's capital structure can be affected by changes in its default risk.
True (A)
A firm may adopt market actions to deliberately move its capital structure towards the target.
A firm may adopt market actions to deliberately move its capital structure towards the target.
Deliberate management actions can result in large changes in a firm's measured capital structure.
Deliberate management actions can result in large changes in a firm's measured capital structure.
A firm's default risk can remain unchanged even if there is a change in the general level of interest rates.
A firm's default risk can remain unchanged even if there is a change in the general level of interest rates.
A firm's target capital structure can be achieved solely through market actions.
A firm's target capital structure can be achieved solely through market actions.
Changes in the market value of a firm's debt could result in small changes in its measured capital structure.
Changes in the market value of a firm's debt could result in small changes in its measured capital structure.
Incurring high profits can lead to a significant increase in a firm's book value equity.
Incurring high profits can lead to a significant increase in a firm's book value equity.
A decrease in the market value of a firm's equity can lead to a significant change in its measured capital structure.
A decrease in the market value of a firm's equity can lead to a significant change in its measured capital structure.
