9. 10.

Which of the following consequences may the "incentive toward underinvestment" lead to? 1) the company always choosing projects with positive NPVs; II) shareholders turning down low-risk, low-return but positive NPV projects; III) the company declaring and paying high cash dividends. Select one: O a. I only O b. ll only Oc II and III only od lll only What is the implication of "risk shifting"? Select one: . When faced with bankruptcy, managers invest in low risk projects to conserve capital O b. When faced with bankruptcy, managers may make accounting changes to conceal the true extent of the problem Oc When faced with bankruptcy, managers do not invest more equity capital. Od. When faced with bankruptcy, managers tend to invest in high-risk, high-return projects. Which of the following consequences may the "incentive toward underinvestment" lead to? 1) the company always choosing projects with positive NPVs; II) shareholders turning down low-risk, low-return but positive NPV projects; III) the company declaring and paying high cash dividends. Select one: O a. I only O b. ll only Oc II and III only od lll only What is the implication of "risk shifting"? Select one: . When faced with bankruptcy, managers invest in low risk projects to conserve capital O b. When faced with bankruptcy, managers may make accounting changes to conceal the true extent of the problem Oc When faced with bankruptcy, managers do not invest more equity capital. Od. When faced with bankruptcy, managers tend to invest in high-risk, high-return projects