6. If a company's cost of capital is less than the required return on equity, then the firm:
- Is all equity financed
- Has debt in its capital structure
- Is perceived to be safe
- Is financed with more than 50% debt
7. Why should managers assume they will receive a fair price for any new shares?
- Financial markets are highly competitive
- All new shares will sell as positive NPV investments
- New share prices are highly regulated
- All new shares must sell at par value
