ld sheet (front and back) are allowed. heng Question 8 Which of the following statement is correct? O EPS are higher with a stock repurchase than with a dividend In a stock repurchase, total equity value drops by the amount of the share repurchase, as with the dividenc Dividends reduce the price of a firm (and the per-share price) O O All statements are incorrect O All statements are correct Next Previous L UHe page self-made formula sheet (front and back) areallwed. blems(1 self-made formula sheet (front and back) are allowed. luck! heng Question 9 The deferred tax liability from depreciation (reported in the deferred tax footnote) can increase because? O Both statements are not true O Both statements are true O There is a large increase in capital expenditures producing more depreciation and a greater difference between book and tax depreciation. The firm increases its estimate of useful live depreciation expense and increasing the difference between book and tax depreciation. s for depreciation expense on the books, thus decreasing O Next Previous Si UPmula sheet (front and back) are allowed. uck eng Question 10 Which of the following statements is correct? The obligations of the special purpose entity are not on the balance sheet because the frm does not have a large enough stake in the entity to consolidate. O Off-balance sheet financing is incurring obligations that do not appear on the balance sheet. O A default premium is the extra required return that a lender demands to compensate for the risk that the borrower will default. A moral hazard problem arises for a lender if the borrower has an incentive to act in a way that makes the debt more risky. All statements are correct All statements are incorrect