1. What are the factors to be considered in determining a firms capital structure?

2. What is recapitalization?

3. Enumerate and explain the components or variables of the Hamada equation.

4. What are the ways in determining the firms optimal structure.

5. How would these factors affect the target capital structure? (Sales stability, High operating leverage, Increase in the corporate tax rate, Increase in the personal tax rate, Increase in bankruptcy costs, Management spending lots of money on lavish perks, Financial flexibility, Firms growth rate)

6. What is the major weakness of Modigliani-Miller Irrelevance Theory?

7. What are signaling effects in capital structure?