Question 1 (10 points) Listen According to M&M optimal capital structure, the homemade leverage is better defined as: 1) The use of debt financing for the purpose of a new capital budgeting investment 2) The decrease of the firm's debt-equity ratio due to issuance of additional equity to new shareholders. O3) The issuance of new debt by a corporation and the use of the proceeds for corporate stock repurchase. 4) the individual shareholder use of lending or borrowing in order to alter the level of financial leverage. Question 2 (10 points) Listen Which of the following statements is correct regarding bankruptcy? 1) creates value for both bondholders and equity holders 2) occurs when the market value of debt-equity ratio equal to one 3) transfers value to creditors at the expense of shareholders 4) is an efficient method of resources reallocation in the economy