Question 2 25 pts (CHAPTER 17) OR In the list below, two statements are true and two are false. TRUE When the firm is in financial distress, stockholders have an incentive FALSE to underinvest. If they did not underinvest then what would happen is that, when they split the project's future cash flow with the firm's bondholders, they would not get the required return on the money that they contributed towards the project in Year 0 (is this 2nd sentence true or false?). [Select] If a firm announces an increase in financial leverage, this may lead to an increased demand for the firm's stock shares and so raise the price per share. What explains this effect is that the firm's stock investors perceive this announcement as a signal that the firm expects high future cash flows from its business projects (is this 2nd sentence true or false?). Select ] Under both the pecking order theory and the signaling theory, firms that increase their debt amounts want to send a certain signal to the investors. [Select] Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 15% corporate income tax rate, its stockholders face a 23% income tax rate, and its creditors face a 40% tax rate, then such firm may choose to have more debt (is the underlined part true or false?). [Select ] When the firm is in financial distress, stockholders have an incentive FALSE to underinvest. If they did not underinvest then what would happen is that, when they split the project's future cash flow with the firm's bondholders, they would not get the required return on the money that they contributed towards the project in Year 0 (is this 2nd sentence true or false?). [Select] [Select] If a firm announces an increase in financial leverage, TRUE demand for the firm's stock shares and so raise the p FALSE effect is that the firm's stock investors perceive this announcement as a signal that the firm expects high future cash flows from its business projects (is this 2nd sentence true or false?). [Select] Under both the pecking order theory and the signaling theory, firms that increase their debt amounts want to send a certain signal to the investors. [Select] Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 15% corporate income tax rate, its stockholders face a 23% income tax rate, and its creditors face a 40% tax rate, then such firm may choose to have more debt (is the underlined part true or false?). Select ] Question 2 25 pts (CHAPTER 17) OR In the list below, two statements are true and two are false. TRUE When the firm is in financial distress, stockholders have an incentive FALSE to underinvest. If they did not underinvest then what would happen is that, when they split the project's future cash flow with the firm's bondholders, they would not get the required return on the money that they contributed towards the project in Year 0 (is this 2nd sentence true or false?). [Select] If a firm announces an increase in financial leverage, this may lead to an increased demand for the firm's stock shares and so raise the price per share. What explains this effect is that the firm's stock investors perceive this announcement as a signal that the firm expects high future cash flows from its business projects (is this 2nd sentence true or false?). Select ] Under both the pecking order theory and the signaling theory, firms that increase their debt amounts want to send a certain signal to the investors. [Select] Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 15% corporate income tax rate, its stockholders face a 23% income tax rate, and its creditors face a 40% tax rate, then such firm may choose to have more debt (is the underlined part true or false?). [Select ] When the firm is in financial distress, stockholders have an incentive FALSE to underinvest. If they did not underinvest then what would happen is that, when they split the project's future cash flow with the firm's bondholders, they would not get the required return on the money that they contributed towards the project in Year 0 (is this 2nd sentence true or false?). [Select] [Select] If a firm announces an increase in financial leverage, TRUE demand for the firm's stock shares and so raise the p FALSE effect is that the firm's stock investors perceive this announcement as a signal that the firm expects high future cash flows from its business projects (is this 2nd sentence true or false?). [Select] Under both the pecking order theory and the signaling theory, firms that increase their debt amounts want to send a certain signal to the investors. [Select] Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 15% corporate income tax rate, its stockholders face a 23% income tax rate, and its creditors face a 40% tax rate, then such firm may choose to have more debt (is the underlined part true or false?). Select ]