True or False. With the assumption of a fixed debt-to-value ratio, the value of a levered company is equal to the present value of the free cash flows when discounted at the weighted average cost of capital.

True

False

With the assumption of a fixed debt-to-value ratio, the capital structure that maximizes firm value is

I. The same as M&M with corporate taxes

II. 100% debt

III. The same as M&M with no corporate taxes

A.I only

B.II only

C.III only

D.I and II

E.II and III

A(n) ___________ beta is the same as a(n) ________ beta.

A.debt, levered

B.equity, asset

C.asset, levered

D.unlevered, asset