> Question 16 1.5 pts Ausco Ltd arranged a loan loan to upgrade its building but instead used the money to purchase risky junk bonds. In accordance with agency theory this is an example of: claim dilution asset substitution sound corporate governance risk aversion Question 17 1.5 pts Management arranged a loan for the company to expand the business but instead used the money to pay dividends. This is an example of: under-investment the diviend retention problem excessive dividend distribution claim dilution Question 18 1.5 pts Which of the following statements about the semi-strong form of market efficiency are FALSE? An efficient market reacts to disclosures and adjusts the share prices in a rapid and unbiased manner. II As the market reacts to the publicly available information, financial analysts serve no purpose. III The identification of mispriced securities can be made through fundamental analysis and drives market efficiency. II and III O I and II O I and III I only Question 19 1.5 pts Analysts typically make adjustments to accounting profit when using models to forecast cash flows and value shares. This practice is evidence of the market being inefficient in the semi-strong form the specific objectives and models used by analysts the need for more regulation in accounting the market being inefficient in the strong form Question 20 1.5 pts Which one of the following explains why a creditor might impose debt covenants in a loan contract? The borrowing company might invest in a riskier project. The borrowing company might wish to terminate the loan contract before the maturity date. The borrowing company might subsequently hold too much cash in the bank. The borrowing company might pay minimal dividends to their shareholders