One of the most important factors in making debt less expensive than equity is______.
A. the tax deductibility of dividends
B. the tax deductibility of interest
C. the tax deductibility of depreciation
D. the tax deductibility of equity
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Which of the following is a key variable in the equation for the capital asset pricing model?
A. The risk-free rate of interest
B. The expected return on the market portfolio
C. The firm's beta
D. All are important components of the CAPM
Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________their currency.
A. surplus, devaluing; deficit, revaluing
B. deficit, revaluing; surplus, revaluing
C. surplus, revaluing; deficit, devaluing
D. deficit, devaluing; surplus, devaluing
Which of the following is NOT part of the Financial Account of the BOP?
A. net portfolio investment
B. net foreign direct investment
C. net import/export of services
D. other Financial items
A small economy country whose GDP is heavily dependent on trade with the United States could use a(n) ________ exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate.
A. independent floating
B. pegged exchange rate with the Euro
C. pegged exchange rate with the US dollar
D. managed float