. THC Clientele Ellect Theory 0.75 pt each) 5. The key disadvantage of the use of debt is: a. Interest rate risk b. bankruptcy costs c. Interest tax shield d. Sovereign risk ch may be arket rate that 6. The concept that if all market participants have equal access to the capital markets, there's nothing special about corporate borrowing, could be best described as: a. Homemade leverage b. Optimal capital structure c. Credit policy irrelevance d. M&M Proposition 11 y on ng mative 7. The debate about whether Dividend policy is relevant or not is an ongoing one. The main argument in this dilemma is that: (pick all that apply) a. While Dividend policy matters, dividend may be irrelevant b. Dividends matter as the value of the stock is based on the present value of expected future dividends. c. Dividend policy is the decision to retain funds to be reinvested in the firm for future capital gains. d. Dividend policy is always built around lower payouts in the present time to help the firm reinvest capital now and grow it to pay higher dividends in the future. 8. All of the following definitions are correct, EXCEPT: a. Regular cash dividends are normal dividends, usually paid on a quarterly basis b. Extra cash dividends can be paid over and above the regular dividend, may or may not be repeated c. Special dividends are a one-time dividend paid over and above the regular dividend, won't be repeated d. Stock dividends are commonly expressed as a percentage and are distributed in cash, may or may not be repeated e. All of the above definitions are correct ers having s nce is the 9. Which of the following statements is (are) correct? a. An increase in the accounts payable period shortens the cash cycle. b. The cash cycle is equal to the operating cycle minus the inventory period. c. A negative cash cycle is preferable to a positive cash cycle. d. The cash cycle plus the accounts receivable period is equal to the operating cycle