Q No. 3 Explain Why you agree or disagree with the following statements. Be specific in your answer and write only the most relevant explanations (Total Marks 7.5, Each 1.5).

a.If a bond sells at a discount, yield to call is more likely to occur.

b.A firm should select the capital structure that is fully unlevered.

c.Leveraged beta represents fundamental operational risk.

d.All other things held constant; the future value of an ordinary annuity is always having a higher future value than annuity due.

e.MM Proposition I with no tax supports the argument that a firm should borrow money to the point where the tax benefit from debt is equal to the cost of the increased probability of financial distress.