1. From the list below, select all of the factors that might help you decide whether to use APV or tax-adjusted WACC.
1. WACC is often simpler to calculate and standardize on within a firm.
2. WACC is always superior to APV.
3. APV more accurately values scenarios with known debt levels.
4. WACC cannot handle changes in debt and equity weights over time.
5. There is no difference between WACC and APV.
2. An increase in the fraction of time deposits versus all deposits increases m2.
True
False
3. For markets to be in equilibrium, what of the following conditions must be true?
a) The required rate of return must equal the realized rate of return; that is, r =
b) The expected rate of return must be equal to the required rate of return; that is, = r.
c) The past realized rate of return must be equal to the expected rate of return; that is, .
d) No companies can be in danger of declaring bankruptcy.