1. Default is a legal procedure where the assets of the firm are transferred to the debt-holders. True False
2. Agency problems exist when the company is owned and managed by an individual or group of individuals who work for their best interest, but reduce the value of the company through their actions. True False
3. A company should continue to add debt to the capital structure, up to some point where the tax benefits are overcome by the burden of interest payments, in order to optimize the capital structure. True False
4. At the first class meeting, six main principles of finance were discussed, which were underscored numerous times since the beginning. Explain the role of the Financial Manager in developing and working with each of these principles in the corporation.