For each of the statements below, state whether you agree or disagree. This should be

followed by a rationale (roughly a paragraph). Your justification should be grounded in

corporate finance theory and a clear understanding of finance practice.

C: The equation VL = VU + TD implies that if the government increased the marginal corporate tax rate, all levered firms would increase in value.

D: Since IPOs are typically under-priced, a strategy of applying for all issues (in equal amounts) is likely to produce substantial investment returns.