1481. In MM-Model, irrelevance of capital structure is based on ________.

A. Cost of debt and equity
B. Arbitrage process *
C. Decreasing ko
D. All of the above

1482. That there is no corporate tax is assumed by ________.

A. Net income approach
B. Net operating income approach
C. Traditional approach
D. All of these *

1483. That personal leverage can replace corporate leverage is assumed by ___________.

A. Traditional approach
B. MM Model *
C. Net income approach
D. Net operating income approach

1484. Which of the following argues that the value of levered firm is higher than that of the unlevered firm ?

A. Net income approach
B. Net operating income approach
C. MM model with taxes
D. BOTH A and C *

1485. In traditional approach which one is correct ?

A. KE rises constantly
B. KD decreases constantly
C. KO decreases constantly
D. None of the above *

1486. Which of the following assumes constant KD and KE?

A. Net income approach *
B. Net operating income approach
C. Traditional approach
D. MM Model

1487. Which of the following is true?

A. Under traditional approach, overall cost of capital remains same
B. Under NI approach , overall cost of capital remains same
C. Under NOI approach overall cost of capital remains same *
D. None of the above

1488. The traditional approach to value of the firm that ________.

A. There is no optimal capital structure
B. Value can be increased by judicious use of leverage *
C. Cost of capital and capital structure are M dent.

1489. A firm has EBIT of 50,000 .Market value of debt is 80,000 and overall capitalization rate is 20% Market value of firm under NOI approach is ________.

A. 2,50,000
B. 1,70,000 *
C. 30,000
D. 1,30,000

1490. Which of the following is incorrect for NOI?

A. KO is constant
B. KD is constant
C. KE is constant *
D. KD & KO are constant.