What would be the priority of the claims as to the distribution of assets in a liquidation under Chapter 7 of the Bankruptcy Act? 1 - Trustees' costs to administer and operate the firm. 2 - Common stockholders. 3 - Taxes due to federal and state governments. 4 - Contributions to employee benefits arising within 180 days before filing 5- General, or unsecured, creditors. Select one: a. 1,4,3,5,2 b. 5,4,1,3,2 c. 4,1,5, 3,2 d. 5, 1, 4, 2, 3 e. 1,5,4,3,2 What is the advantage of a Chapter 11 filing for the firm? Select one: O a. Managers get a clean slate by having some of the firm's debt eliminated from the firm and can proceed with their manangement plan. b. The firm is able to renegotiate contracts that constrain cash flows of the firm and potentially force settlement of legal liability. c. Managers have the ability to use bankruptcy to eliminate unions from their operations, d. The firm continues to operate and can put a plan of restructure in place as long as all of the debt and equity holders unanimously approve of the plan. e. Managers can renegotiate terms of debts with the potential that they will experience salary reductions but won't lose their jobs. Business risk is affected by a firm's operations. Which of the following is NOT associated with (or does not contribute to) business risk? Select one: a. Demand variability. b. Sales price variability. c. The extent to which operating costs are fixed. d. The extent to which interest rates on the firm's debt fluctuate. e. Input price variability Signaling theory relaxes the information asymmetry assumption of M&M. What is implied about capital structure under signalling theory? Select one: a. Managers will attempt to sell bonds when stock is overvalued to avoid reductions in stock prices b. Managers will issue bonds as a means of illustrating that the stock price is undervalued by the market C. Stock sales are a signal that share prices will continue to climb in the future. d. All of the implications about signalling theory are correct. e. None of the implications about signalling theory are correct