1. Which of the following is true: If the manager increases the firm's D/E ratio:

A. The firm's stock will have a higher expected return and less risk.

B. The firm's stock will have a lower expected return and more risk.

C. The firm's stock will have a higher expected return and more risk.

D. The firm's stock will have a lower expected return and less risk.

2. On an average day, Goose Down Feathers receives $1,000 in checks from customers. These checks clear the bank in an average of 4 days. The applicable daily interest rate is 0 percent. What is the present value of the float? Assume each month has 30 days.

$2,448.00

$244.00

$192.00

$100.00

$4,000.00