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1. Which statement is false? A. A corporation is not required to pay...

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Finance

1. Which statement is false?

  • A. A corporation is not required to pay a dividend to its common shareholders.
  • B. Only financial institutions can provide financial intermediation.
  • C. Shareholders can vote by proxy for members of the board of directors, but they are not required to vote that way.
  • D. As a general rule, a lower beta indicates a less risky stock in a well-diversified portfolio.

2. The cost of equity is generally greater than the cost of debt because

  • A. equity has the residual claim on cash flows of the corporation.
  • B. interest paid on debt is tax deductible.
  • C. both a. and b.
  • D. neither a. nor b.

3. As the price of a T-bill falls, its yield falls, too.

  • A. True
  • B. False

4. Which is the correct statement?

  • A. The greater the expected return, the greater the risk that must be taken.
  • B. The greater the expected risk taken, the greater the return earned.
  • C. The greater the return, the greater the risk that must be taken.
  • D. The greater the expected risk taken, the greater the expected return given.

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