35. Which of the following is TRUE about the threat ofsubstitutes?

		When threatened by substitutes, existing competitors willincrease their prices.
		Innovation makes an existing product or service more attractiveto its customers.
		If there are numerous substitutes, the firm's profit margins andrevenues will decline.
		If the competitors are strong, existing competitors will notreact strongly to the threat of substitutes.

36. When a firm needs to raise money via a bond issue, one ofthe quickest ways is through a ________. This activity involves thepurchase of a large block of securities by a large institutionalinvestor such as a pension fund, an endowment fund, or an insurancecompany.

		private placement
		public placement.
		secondary offering.
		none of the above

37

Which of the following is NOT a disadvantage of a soleproprietorship as a form of business organization compared to thecorporate form of business organization?

		Access to the capital markets
		Unlimited liability of the owners
		Subject to the double taxation
		Limited liability of the shareholders

43 To estimate the after-tax cost of preferred stock youmust:

		multiply the cost of preferred by (1 - the tax rate).
		multiply the cost of preferred by (1 + the tax rate).
		multiply the cost of preferred by (the tax rate).
		None of the above because preferred dividend payments are nottax deductible for the firm