5. Indicate that the statement is true or false for T/F questions. Fill in the blank for the other questions. a. In the presence of flotation costs, the cost of external equity is greater than the cost retained earnings. (T/F) b. If the overall stock market is expected to be booming soon, then one should increase the proportion of (high/low)-beta stocks in ones portfolio. c. If Debt = $1,000, average tax rate = 30% and interest rate = 10%, then the dollar value of tax savings equals ( ). d. In the two-stage DCF method, the present value of the second-stage cash flows is called ( ). e. If a firms CEO and key employees hold stock options, then the firm is likely to distribute excess cash using (dividends/share repurchases) f. The degree of operating leverage is defined as the percent change in ( ) over the percent change in ( ). g. If a firms operating leverage is high, then its optimal debt ratio is likely to be (higher/lower) than that of the average firm according to the trade-off theory. h. Two advantages of triangular merger(vs. direct merger) are (1) that the buying firm does not need to hold shareholders meeting and (2) that ( ). i. Suppose that A (aggressor) intends to use stock as consideration in purchasing T (target) in a triangular merger. When A creates an SPV( i.e., a paper company), it will capitalize the SPV with ( ).