1)Â Â Â When you go through an IPO you
- raise capital from venture capitalists.
- raise debt from a bank.
- sell shares to the general public.
- issue preferred stock. Â
2)Â Â Â In the Principal/Agent relationship theAgent has
- the right to dismiss the Principal.
- no fiduciary responsibility towards the Principal.
- inferior skills.
- superior knowledge.
3)Â Â Â Which of the following is notan example of aPrincipal/Agent relationship?
- Student/Professor.
- Firm/Investment Bank.
- Equity Holder/Management.
- Management/Debt Holder.
4)Â Â The amount of debt that a firm can take on isaffected by
- the Principal/Agent relationship between debt and equityinvestors.
- covenants in the debt instruments.
- market risk.
- all of the above.
5)Â Â The tax deductibility of interest results in alower cost of capital for the firm.
      True/False
6)Firms in the Death Stage will typically increase their debtload.
      True/False
