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NEW QUESTION: 1
Which of the following statements is most correct?
A. The optimal capital structure minimizes the cost of equity.
B. If the after-tax cost of equity financing exceeds the after-tax cost of debt financing, firms are always able to reduce their WACC by increasing the amount of debt in their capital structure.
C. Increasing the amount of debt in a firm's capital structure is likely to increase the cost of both debt and equity financing.
D. All of these answers are correct.
E. The optimal capital structure maximizes EPS.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Increases in the debt ratio increase the cost of both debt and equity. Bondholders recognize that firms with higher debt levels are more likely to experience financial problems, which will explain why increases in the debt ratio raise the cost of debt. Concerning the cost of equity, the business risk premium, in the required rate of return equation, does not depend on the debt level. It will remain constant at all debt levels.
However, the financial risk premium does vary depending on the debt level; the higher the debt level, the greater the risk premium, and therefore the higher the cost of equity.
NEW QUESTION: 2
.If an IS auditor observes that an IS department fails to use formal documented methodologies, policies, and standards, what should the auditor do? Choose the BEST answer.
A. The auditor should at least document the informal standards and policies, and test for compliance. Furthermore, the IS auditor should recommend to management that formal documented policies be developed and implemented.
B. The auditor should at least document the informal standards and policies, and test for compliance. Furthermore, the IS auditor should create formal documented policies to be implemented.
C. Lack of IT documentation is not usually material to the controls tested in an IT audit.
D. The auditor should at least document the informal standards and policies. Furthermore, the IS auditor should create formal documented policies to be implemented.
Answer: A
Explanation:
If an IS auditor observes that an IS department fails to use formal documented methodologies, policies, and standards, the auditor should at least document the informal standards and policies, and test for compliance. Furthermore, the IS auditor should recommend to management that formal documented policies be developed and implemented.
NEW QUESTION: 3
Which document describes the procurement item in sufficient detail to allow prospective sellers to determine if they are capable of providing the products, services, or results?
A. Request for quote
B. Procurement statement of work
C. Procurement management plan
D. Request for proposal
Answer: B
NEW QUESTION: 4
Given:
Which two constructors will compile and set the class field strings? (Choose two.)
A. Option B
B. Option C
C. Option E
D. Option D
E. Option A
Answer: B,C