Your CFO tells you that if you sell (issue) a small amount of debt and use the proceeds to buy back stock, then your WACC will rise. If you issue the debt and buy back the stock, according to the trade-off theory . . .

Q 12 Question 12 (2 points) What will happen to the debt ratio? Select one: It will fall. It will stay the same. It will rise. The effect is ambiguous.

Q 13 Question 13 (2 points) What will happen to the required return on the stock? Select one: It will fall. It will stay the same. It will rise. The effect is ambiguous.

Q 14 Question 14 (2 points) What will happen to the stock price? Select one: It will fall. It will stay the same. It will rise. The effect is ambiguous.

Q 15 Question 15 (3 points) Your current debt level is Select one: Too low Just right Too high

Q 16 Question 16 (2 points) Expected EPS will Select one: Fall Stay the same Rise Ambiguous