QUESTION 18: The tradeoff in the tradeoff model is between

		risk and return
		peanut butter and jelly
		debt and equity
		the interest tax shield and financial distress costs

QUESTION 19: Which statement is true when referring to a firms indebtedness?

		a firm should use debt
		it is better if a firm uses no debt
		debt increases risk above most investors comfort level
		debt reduces operating income

QUESTION 20: In the tradeoff model, increasing use of debt results in increasing firm value because of the

		value of the tax shield (interest tax shelter)
		higher profitability of earning assets
		reduction in operating costs from higher efficiency
		lack of corporate taxes