4.

Which of the following statements related to financial risk is/are correct? I. Financial risk is the risk associated with the use of fixed assets. II. Financial risk is the risk associated with the use of debt. III. Financial risk has no impact on the cost of equity. IV. Another name for financial risk isbusiness risk. V. Financial riskremain the same regardless of the debt amount.

I, II, III, and IV only

I and III only

II and III only

II only

I, II, and III only

5.

Using _________________, Susan has just undone her firm's dividend policy and created a better dividend policy for herself by reinvesting the dividends she received to buy more shares of the firm's stock.

recapitalization

perfect foresight model

personalization

homemade dividend policy

offsetting leverage

6.

Which one of the following is an example of a sunk cost?

$10,000 project that must be given up if a similar project is accepted.

none of the given costs is a suck cost.

$2,800 increase in comic book sales if a store commences selling puzzles

$3,000 spent on developing a new model of the product.

$2,500 of lost sales due to an item was out of stock