1. Which statements are true about book value (BV) and market value (MV)?
Check all that apply:
The BV of debt is usually greater than the MV of debt.
The BV of debt is usually similar to the MV of debt.
The BV of equity is usually greater than the MV of equity.
The BV of equity is usually less than the MV of equity.
2. The capital structure weights to be used in the WACC calculation should ideally reflect _____.
target book values
target weights
observed market values
observed book values