QUESTION 1

1. Conversions and warrants are incentives for equity ownership.

   True

   False

0.7 points

QUESTION 2

1. Debentures are secured by the assets.

   True

   False

0.7 points

QUESTION 3

1. A firm has $2,500,000 in debt on its balance sheet, and a marginal tax rate of 40%. The resulting added-value from the tax shield arising from this debt burden would be:

   		$100,000
   		$1,250,000
   		$1,000,000
   		$1,500,000