1. Assume that the optimal consumption stream is (z1,z2), Olas current income stream is (y1, y2) where z1> y1 and z2< y2.Which of the below statements is correct?
   1. Ola is a lender
   2. Ola is a borrower
   3. Ola s is neither a lender nor a borrower
   4. In a capital market, such transactions are forbidde
2. The debt to equity ratio of a corporation X is 1.378. Assume that corporation X operates in a non perfect capital market. Which of the below statements is correct?
   1. the manager of firm X will not adopt the optimal capital structure.
   2. The cost of bankruptcy is not zero.
   3. the manager of firm X will adopt the optimal capital structure.
   4. Both A and B
3. The consumers opportunity set is defined as *
   1. Any combination on the market opportunity line
   2. Any combination below the market opportunity line
   3. Any combination above the market opportunity line
   4. Both A and B
4. A corporation X is operating in a perfect capital market. The manager of corporation X wishes to maximize its market value and thus he hired an economic analyst to help him with this aspect. Corporation X adopts the following dividend policy: 20% of its profits are distributed as dividends while the rest are retained earnings. Finally, its equity to debt ratio is 3.03.Is corporation X adopting the right dividend policy to optimize its market value?
   1. Yes
   2. The optimal dividend policy is 100% retained earnings and 0% dividends
   3. The optimal dividend policy is 0% retained earnings and 100% dividends
   4. None of the above