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13 Cards in this Set
- Front
- Back
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The interest tax shield is equal to what? |
Debt • interest rate • marginal tax rate |
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True or False: in the presence of taxes, with no debt, both the pre-tax WACC and the effective after tax WACC are equal to the unlevered equity cost of capital |
True |
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A |
A |
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In the presence of taxes, as leverage increases, the firm’s equity cost of capital rises |
True (because of that D/E equation) |
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In the presence of taxes, as leverage increases, the firm’s pre-tax WACC remains unchanged |
True |
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In the presence of taxes, as leverage increases, the firm’s effective after-tax WACC remains unchanged. |
False |
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In the presence of taxes, as the debt and equity costs of capital both rise when leverage is high, the effective after-tax WACC declines |
True |
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In the presence of taxes, as leverage increases, the firm’s equity cost of capital rises |
True (because of that D/E equation) |
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In the presence of taxes, as leverage increases, the firm’s pre-tax WACC remains unchanged |
True |
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In the presence of taxes, as leverage increases, the firm’s effective after-tax WACC remains unchanged. |
False |
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In the presence of taxes, as the debt and equity costs of capital both rise when leverage is high, the effective after-tax WACC declines |
True |
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An Geometric average Asian Option is less than or equal to what? |
An Arithmetic Average Asian Option |
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The value of an Average Price Asian Option is less than or equal to what? |
An ordinary option |
