True or False

1.If a company increases the maturity of its debt, everything else being equal, the value of a European call option on the company's equity will increase.

2.Using regression-adjusted multiples when the regression coefficients have the right signs, despite being statistically insignificant, is appropriate.

3.Two stocks with the same dividend yield trading at different market prices implies a market inefficiency.

4.An option on the interest rate will be more valuable when the volatility of interest rates is higher.

5.In the context of relative valuation, the PS ratio is always greater than the EV/Revenue ratio. (Assume all other inputs stay the same.)

6.Equity in a firm with no leverage behaves like the assets of the firm.

7.The ability to increase output at no additional cost is an example of a real option.

8.A risky corporate bond can offer a negative expected return while its promised yield to maturity is still positive.

9.Securitizing all the projects of a firm by issuing shares for each project can never reduce the combined value of the equity of the firm.

10.In the context of a single-stage growth model, the PB ratio always increases when the reinvestment rate increases. (Assume all other inputs stay the same.)