1.

Which of the following statements is correct?

(a)		The lower the level of a firm's debt, the higher the firm's leverage.
(b)		The lower the level of a firm's debt, the lower the firm's equity multiplier.
(c)		The lower the level of a firm's debt, the higher the firm's equity multiplier.
(d)		The tax benefit from using debt financing reduces a firm's risk.

2.Why is the quick ratio considered by some to be a better measure of liquidity than the current ratio?

(a)The quick ratio more accurately reflects a firm's profitability.
	(b)	It omits the least liquid current asset from the numerator of the ratio.
	(c)	The current ratio does not include accounts receivable.
	(d)	It measures how "quickly" cash flows through the firm.