Problem on riskless security and advantage of debt financing

Reference no: EM1354923

69 The existence of a riskless security in the risk and return trade-off
a. Does NOT influence investors preferences regarding which risky portfolio to hold.
b. Results in investors all holding different portfolios of risky assets, depending on their individual risk preferences.
c. Results in investors all holding the same portfolio of risky assets, which corresponds to the tangency point of the efficient portfolio frontier of risky assets and a line through the risk-less asset's return.
d. None of the above.
e. none of the above.

79 If 2 projects are not mutually exclusive, then they are, by definition, independent projects.
a. True
b. False

80 All of the following are advantages of debt financing except which one?
a. Interest is a tax-deductible expense
b. It allows for the use of "other people's money" in financing a business
c. It results in loss of ownership control of the business.
d. The cost of debt financing is generally cheaper than equity financing.
e. Owners do not have to share the potential gains of the business, since debt only requires repayment of the amount owed.

82 The semi-annual interest payments that corporate bonds in the U.S. typically pay are conventionally referred to as
a. yield payments
b. coupon payments
c. call payments
d. premium payments
e. dividends

Reference no: EM1354923

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