1.Which of the following is not something that you would consider when evaluating the optimal capital structure?

d. Security Rating.

b. EBIT-EPS Analysis.

a. Agency Costs.

f. Neither the second nor fourth answer is correct.

c. Taxes.

e. All of the above are considered when determining the optimal capital structure.

2.Which of the following is an argument for the relevance of dividends?

b. Reduction of uncertainty.

a. Informational content.

c. Some investors' preference for current income.

d. All of the above.

3.All of the following are true of stock splits EXCEPT:

a. Market price per share is reduced after the split.

d. Proportional ownership is unchanged.

b. The number of outstanding shares is increased.

c. Retained earnings are changed.