1. What is the possible cost of capital rationing?
The firm may have excess fixed assets.
The firm is likely to take too many risky projects.
The firm may miss out on positive NPV opportunities
The firm may have too high a cost of capital.
2. ?Which of the following pairs of risks have both the components referring to the same kind of risk?
a. ?Firm-specific risk and nondiversifiable risk
b. ?Market risk and relevant risk
c. ?Market risk and unsystematic risk
d. ?Firm-specific risk and systematic risk
e. ?Firm-specific risk and market risk