M&M Proposition I with tax states that the value of a levered firm increases as the:

Multiple Choice

• Debt-equity ratio increases.

• Inflation rate increases.

• Level of debt decreases.

• Tax rate of the firm decreases.

• Unlevered value of the firm decreases

Absent taxes and market imperfections, the market value of a stock will tend to decrease by roughly the amount of the dividend on the:

Multiple Choice

• Dividend declaration date.

• Date of payment.

• Date of record.

• Ex-dividend date.

• Day after the date of payment.