1. Assume that you buy into this argument that debt adds discipline to management. Which of the following types of companies will most benefit from debt adding this discipline?

a. Conservatively financed, publicly traded companies, with stocks held by millions of investors, none of whom hold a large percent of the stock

b. Aggressively financed, publicly traded companies, with stocks held by millions of investors, none of whom hold a large percent of the stock

c. Conservatively financed (very little debt), privately owned businesses

d. Conservatively financed, publicly traded companies, with an activist and primarily institutional holding.

2.

2. Assume that you are a bank. Which of the following businesses would you perceive the greatest agency costs?

a. A Large Technology firm

b. A large investment bank

c. A large airline company

d. A Large Regulated Electric Utility