1) When a firm increases its debt ratio

a) its weighted average cost of capital increases

b) its cost of debt and cost of equity increase

c) both a and b are true

d) its weighted average cost of capital decreases

2) What is the goal of the financial manager?

a) maximize sales

b) maximize profits

c) maximize share price

d) maximize cash flow

3) Which of the following decisions has the potential to have the greatest impact on firm value?

a) the capital structure decision

b) the dividend decision

c) the investment decision

d) the hedging decision