A. What is a company's ratio of its debt to its equity known as?

• Net present value
• Valuation
• Weighted average cost of capital
• Leverage

B. The risk that the cost of your investment will rise over time is known as __________.

• interest rate risk
• credit risk
• market risk
• model risk

C. One reason a company may choose to issue additional equity instead of debt when raising capital is that __________.

• debt does not have the same tax benefits that equity does
• they don't want to over-leverage themselves for fear of defaulting
• they want more leverage
• debt impacts a company's cost of capital, but equity does not

D. A restaurant company purchases a number of its own shares of stock in order to increase the company's share price.

What type of market transaction is taking place?

• Secondary market offering
• Share buyback
• Private placement
• IPO