7. Capital structure theory Imagine you are a contestant on a popular television quiz show, Cash for Questions. You are thrilled that the category is ''Capital Structure Concepts,'' because you just learned about the theory and practical consequences associated with corporate financing decisions in your business finance class. There are five questions in this category, and the host, Simon Simoleons, will give you the answer to each question in each of the following boxes. Remember, you must phrase your response in the form of a question and select the correct answer from the dropdown list. Good Luck! Disclaimer: You won't actually receive any money if you answer the questions correctly. Question 1: $100 As a result of the provisions of the U.S. tax code, corporations are encouraged to use this form of financial capital in their capital structures. Question 2: $200 Other things held constant, this is the nature of the relationship between a firm's earnings volatility and bankruptcy risk. Question 3: $300 Everything else held constant, an increase in a Firm's reliance on debt will have this effect on its risk of bankruptcy. Question 4: $400 Between debt and equity financing, this form of financing is less expensive when compared on an after-tax basis. Question5: $500 In general, the price of a corporation's outstanding common shares react in this What is ? manner when the firm's management announces a new offering of common stock