Capital Structure

1. ____ can be used to limit the ability of bad managers to waste shareholder money
4. a method of working out return on equity
7. if a company issues debt to buy back equity, the after tax ____ will fall
8. if creditors think a company might turn insolvent, they may ask for cash on _____
10. a theory of capital structure
11. interest payments are tax _____
14. shareholder-manager agency costs arise when manager ____ do not match the shareholders
15. debt financing can ___ agency costs
16. too much debt can lead to financial _______
18. M&M suggest that companies don't need to worry about interest tax shields because of home-made _____
19. An M&M theory 1 is that capital structure is
21. compared to cash-on-hand and debt, shares can be considered
22. Total equity risk equals business risk times by ____ risk
23. James' favourite sport

2. Underwriting and out of pocket costs are more than ___ times as large for shares compared to bond sales
3. an example of a direct insolvency cost would involve paying
5. ______ & Modigliani suggested multiple capital structure theories
6. insolvency costs include loss of ____
9. debt can often be attractive due to ____ tax shields
12. If financial policy is important, it must be because information and ____ costs matter
13. indirect insolvency costs apply to change in ____ of people who deal with the company
14. costs of financial distress are also known as _____ costs
17. the PAL leaders are James and ______
20. If financial policy is important, it must be because ____ matters
21. if there are no taxes, transaction costs and investment policy is not affected by capital structure decisions, relevant decision will have no _______