QUESTION 4 Which of the following statements is most CORRECT? A. Projects with nonnormal cash flows can have multiple MIRRs. OB. The IRR method is flawed because it assumes reinvestment of the cash flows at the cost of capital. OC. The MIRR assumes that cash flows are reinvested at the project's MIRR. OD. Some projects with non-normal cash flows have only one IRR. If two mutually exclusive normal projects have the same size and life, MIRR and NPV may not agree as OE. to which project will add the most value to the firm. QUESTION 6 Which of the following statements is CORRECT? If a mature public firm announces that it is selling a new stock offering, the signaling theory says that a positive signal regarding A. the firm's future has been created. OB. The higher a firm's degree of operating leverage, the higher its breakeven point tends to be. The degree of total leverage is caused only by the fact that fixed costs do not vary proportionally with OC. sales. Lower operating leverage generally encourages a firm to have a lower debt ratio. OD High business risk means a company also has high financial risk. O E