5. All else equal, a higher corporate tax rate ______________. a. Will decrease the WACC of a firm with debt and equity. b. Will not affect the WACC of a firm with debt. c. Will decrease the WACC of a firm with no debt. d. Will increase the WACC of a firm with debt and equity. e. Will change the WACC of a firm with debt, but the direction cannot be determined without more information.

6. A company announces that its dividend will be $.89 per share this quarter, which is an 18% drop from last quarter. The stock price falls by two points the day after the announcement. This is because of a. information content effect b. clientele effect c. homemade dividends d. target dividend effect e. residual dividend policy

7. The board of directors declared a dividend on Tuesday, July 23. The record date is Monday, August 12. The dividend will be paid on Friday, August 23. What is the ex-dividend date? a. Thursday, August 8 b. Friday, August 9 c. Saturday, August 10 d. Wednesday, August 14 e. Tuesday, August 13

8. If the ex-dividend price is $65.00, the declared dividend is $4.00 and the tax bracket of the average investor is 15%, then the price BEFORE the ex-dividend date must be: a. $68.40 b. $69.25 c. $62.55 d. $64.75 e. None of the above