Table Window Help Specimen Paper_LUBS2206 Saved to my Mac Mailings Review View Table Design Layout Tell me > 4 21 TT Aabbcode AalbCcDdEe AaBbceDdEe Aa Normal No Spacing Heading Section A - Answer all multiple choice questions 1. A Type I agency relationship describes: a) the relationship between a company and the government b) the relationship between shareholders and management c) the relationship between shareholders and employees d) the relationship between shareholders and customers e) the relationship between a controlling and minority shareholder 2. Which of the following are disadvantages of a partnership? 1. Limited life of the partnership II. Personal liability for partnership debt III. Greater ability to raise capital than a sole proprietorship IV. Lack of ability to transfer partnership interest a) I and II only b) III and IV only c) II and Ill only d) I, II and IV only e) I, III and IV only 3. Blossom N.V. has 16,000 of perpetual debt outstanding selling at par with a coupon rate of 6 per cent. The corporate tax rate is 25 per cent. What is the present value of the tax shield? a) 2,823 b) 2,887 c) 4,000 d) 4,500 e) 4,633 4. Charlie Ltd has a pre-tax cost of debt of 7 per cent and an unlevered cost of equity of 13 per cent. Charlie Ltd has a marginal tax rate of 30 per cent and a levered cost of equity of 16 per cent. What is Charlie's debt-equity ratio? a) 0.29 b) 0.41 c) 0.59 d) 0.65 e) 0.71