this is financial Mgmt principles course

Section A State True False (1 mark each) 1) Claims of preferred stockholders are junior to bondholders, but senior to those of common stockholders. True False 2) Agency problems often exist between the firm's stockholders and the managers of the firm. True False 3) Since preferred stock pays a fixed dividend each period, the cost of preferred stock is the dividend as a percent of the current price for the firm's preferred stock. True/ False 4) The par value of a corporate bond indicates the level of interest payments that will be paid to investors. True/ False s, The weighted average cost of capital is computed using before-tax costs of each of the sources of financing that a firm uses to finance a project. True False . In the event of bankruptcy, preferred stockholders and common stockholders have the same claim on the firm's assets. True False 7. If the before-tax cost of debt is 9% and the firm has a 34% marginal tax rate, the after-tax cost of debt is 5.94%. True False >>Common stock represents a claim on residual income. True False Stock valuation is more precise than bond valuation as stock cash flows are more certain. True False