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3. A low current ratio may indicate liquidity risk, while a very high one may suggest ………….. use of assets.
5. The weighted average cost of capital (WACC) is minimized at the firm’s………………capital structure.
6. Pecking order theory is based on the presence of …………….. information between managers and investors.
7. Firms with high intangible assets and growth options are more sensitive to the indirect costs of ………………...
8. Stock holders will be indifferent between dividends and share repurchases in a ……………… capital market.
9. A firm’s cost of equity increases with financial leverage due to the increased…………….borne by equity holders.
11. The most important reason for long term leasing is ……………. reduction.
15. ………………. Theory argues that profitable firms are likely to increase their leverage.
16. In a sale and leaseback arrangement, the original owner of the asset becomes the …………..after selling the asset.
18. Offering credit can increase sales but also increases……………….. risk.
19. A project with non-conventional cash flows may have ……………. IRRs.
20. Leasing can be advantageous when the lessor has a ……….. tax rate than the lessee, allowing greater value from tax shields.

1. ……………………….. value accounts for the value of all cash flows beyond the explicit forecast period.
2. The decision to pay excessive dividends or sell off assets before bankruptcy to benefit shareholders is referred to as …………. the property.
4. In reality, firms do not use 100% debt due to the potential costs of financial………….
10. The Fisher equation shows the relationship between nominal interest rate, real interest rate, and………………..
12. The agency problem between shareholders and debt-holders arises because shareholders have an incentive to take on projects with ………….. risk after debt is issued.
13. The replacement decision is a form of ……………… decision in capital budgeting.
14. The stock's EPS is expected to ………….. following the share repurchase.
17. If the required return on equity increases while dividend growth remains unchanged, the stock’s price will………….