Select one reason a company's capital structure may include more equity than debt.

• Relying too heavily on debt can increase the interest rate that a company must pay on its debt.

• Taking on more equity means that a company will be more leveraged.

• Equity has significant tax advantages that debt does not.

• Too much debt will decrease a company's volatility.

Which of the following is an example of a market risk for a company that manufactures automobiles?

• Being suddenly unable to source a critical component of the automobile

• A competitor that offers a similar line of cars with comparable quality at lower prices

• A failure in the company's accounts receivable process

• Damage to completed cars being transported to a buyer

What principle of corporate governance requires public clarification of the roles and responsibilities of board and management in order to provide stakeholders with a level of accountability?

• Integrity and ethical behavior

• Shareholder rights

• Interests of other stakeholders

• Disclosure and transparency

The risk that your investment will lose value because your return is dependant on the stability of a secondary investment is known as __________.

• prepayment risk

• asset-backed risk

• liquidity risk

• model risk