Match the Person or Term with the with the Correct

question 37

Multiple Choice

Match the person or term with the with the correct description.
-Operation Desert Storm

• A)Israel and Palestinian agreement
• B)dismantled by Clinton
• C)awareness of American diversity
• D)Rwanda
• E)banking regulation repealed in 1999
• F)largest corporate employer in 2000
• G)Foxwoods Casino
• H)Chinese demonstration for democracy
• I)cash payment for low-income workers
• J)fall of communism in eastern Europe
• K)free-trade zone
• L)Kuwaiti freedom

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Definitions:

Static Theory of Capital Structure

A financial hypothesis that suggests there is an optimal capital structure for a company where the cost of capital is minimized, and the value of the firm is maximized.

M&M Proposition I

A theorem stating that in a perfect market, the market value of a company is unaffected by how that company is financed, regardless of whether through debt or equity.

Debt

An amount of money borrowed by one party from another, to be repaid with interest.

M&M Proposition II

A theory in corporate finance that asserts the cost of equity is a linear function of the company's debt/equity ratio, under the assumption of no taxes and financial distress costs.