7) Which one of the following is a risk that applies to most securities? A) Asset-specific B) Systematic C) Industry D) Unsystematic 8) Systematic risk is measured by: A) the geometric average B) beta. C) the arithmetic average D) the mean. 9) The average of a company's cost of equity, cost of preferred, and aftertax cost of debt that is weighted based on the company's capital structure is called the A) structured cost of capital. B) weighted average cost of capital. C) weighted capital gains rate. D) reward-to-risk ratio 10) Which one of these will increase a company's aftertax cost of debt? A) A decrease in the market rate of interest B) A decrease in the company's debt-equity ratio C) A decrease in the company's tax rate D) An increase in the credit rating of the company's bonds 11) A firm should select the capital structure that: A) is fully unlevered. B) equates the value of debt with the value of equity. C) produces the highest cost of capital. D) maximizes the value of the firm. 12) Which one of the following is the equity risk related to capital structure policy? A) Market risk B) Systematic risk C) Business risk D) Financial risk 13) Which one of the following states that the value of a company is unrelated to the company's capital structure? A) M&M Proposition II, no tax B) Homemade leverage C) Pecking order theory D) M&M Proposition I, no tax