(1) Which one of the following states is NOT correct? (A) The higher the marginal tax rate, the greater the benefits of debt. (B) Firms with more stable earnings should borrow more, for any given level of earnings. (C) Firms where lenders can monitor/control how their money is being used should be able to borrow more than firms where lenders' monitoring is difficult. (D) As the separation between managers and stockholders increases, the benefits of debt decrease. (E) Firms with better access to capital markets should be more willing to borrow more today. (2) Assume that you have no choice but to buy non-voting shares in a company with both voting and non-voting shares. From a corporate governance standpoint, which of the following would you view as LEAST dangerous to you? (A) Voting shares are not traded and held entirely by CEO. (B) Voting shares are traded, but concentrated in the hands of CEO. (C) Voting shares are traded and held by CEO and by government-controlled institutions. (D) Voting shares are traded and widely dispersed across shareholders. (E) Voting shares are traded and held by activist investors. (3) There is an on-going debate on whether companies should be banned from buying back their stocks. Assuming that you want to restrict buybacks, which of the following groups of companies would you target for the restriction? (A) Under levered firms, with few good investment opportunities. (B) Over levered firms, with few good investment opportunities. (C) Over levered firms, with many good investment opportunities. (D) Under levered firms, with many good investment opportunities. (E) None of the above. (4) Which of the following statements is TRUE? (A) Diversification is viewed as an important benefit of one firm acquiring another. (B) Takeover defenses are always good for shareholders. (C) Poorly managed firms with stock that has underperformed the competitors are more likely to be targets of hostile acquisitions than well-managed firms. (D) The shareholders of acquiring firms are winners in takeovers. (E) Acquirers' announcement returns are significantly more positive when the deals are financed with stock