(11) Utility firms tend to have high debt ratios because they are regulated, and their earnings are stable. If the utility market is opened up to free competition, utility firms will have volatile earnings. What change would you expect to see in the debt ratios? A. No change. B. Debt/capital ratios will be 100%. C. Debt ratios will go up. D. Debt ratios will go down (12) A firm has no debt right now and tries to find its optimal debt ratio. It has a tax rate of 30%. Its insider holdings are 50% of outstanding shares. Its standard deviation of operating earnings is 10%. Based on the following regression, what is the predicted debt ratio for the firm? Predicted debt/capital ratio = 0.3 +0.25(tax rate) - 0.15(insider holdings) - 0.20(s.d.) A. 38% B. 36% C. 30% D. 28%