Which of the following statements is most CORRECT?

a$.$ The primary test of feasibility in a reorganization is whether every claimant agrees with the reorganization plan.

b$.$ The basic doctrine of faimess states that all debtholders must be ireated equally.

c$.$ Since the primary issue in bamkuptcy is to determine the sharing of losses between cwners and creditors, the "public interest" is not a relevant concern.

d$.$ While a firm is in bankruptcy, the existing management is always allowed to retain control, though the court will monitor its actions closely.

e$.$ To a large extent, the decision to dissolve a firm through liquilation versus keeping it alive through reorganization depends on a determination of the value of the firm if it is rehabilitated versus the value of its assets if they are sold off individually.

Which of the following is NOT associated with $($or does not contribute to$)$ business risk? Recall that business risk is affected by a firm's operations.

a$.$ Sales price variability.

b$.$ The extent to which operating costs are fixed.

c$.$ The extent to which interest rates on the firm's debt fluctuate.

d$.$ Input price variability.

e$.$ Demand variability.

Which of the following statements is CORRECT, holding other things constant?

a$.$ An increase in the personal tax rate is likely to increase the debt ratio of the average corporation.

b$.$ If changes in the bankruptcy code make bankuptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

c$.$ An increase in the company's degree of operating leverage is likely to encourage a company to use more debt in its capital structure.

d$.$ An increase in the corporate tax rate is likely to encourage a company to use more debt in its capital structure.

e$.$ Firns whose assets are relatively liquid tend to have relatively low bankuptcy costs, hence they tend to use relatively little debt.