1. The ____ is cited by the author as a reason for using just one rate, a long-term yield, as the average cost of debt financing for a firm that has multiple issues of debt with varying maturities.

a. efficient markets hypothesis b. market substitution theory c. biased expectation theory d. unbiased expectations theory

2. Financial managers should consider taking ____ financial risk when operating risk is high, but may consider taking ____ financial risk when operating risk is low.

a. less:less

b. less:more

c. more; more

d. more;less