1. The level of sales at which earnings per share (EPS) will be the same whether the firm uses debt or common stock financing is known as _____.
a. ?the standard deviation of EPS
b. ?the indifference point
c. ?the beta point
d. ?the coefficient of variation
e. ?the optimal capital structure
2. If the stockholders of a firm prefer current income to future income, then the:?
a. ?cost of equity increases as excess cash available to the firm increases.
b. ?cost of equity increases as debt restrictions decrease.
c. ?cost of equity decreases as the investment opportunities of the firm increase.
d. ?cost of equity decreases as dividend payout increases.
e. ?cost of equity decreases as management's restriction on ownership dilution increases.