1. Which of the following is true of risk avoidance?

Risk avoidance is any activity that helps evade an act that creates a risk.

Risk avoidance is an effective way to handle small exposures to loss when insurance is too expensive.

Risk avoidance is any activity that increases the chance that a loss will occur.

Risk avoidance is an act that reduces the probability that a loss will occur.

Risk avoidance is any activity that lessens the severity of loss once it occurs

2. A firm can increase its intrinsic value by increasing their _______ and decreasing their _______.

A. Weighted Average Cost of Capital ; Free Cash Flows

B. Cost of debt ; Free Cash Flows

C. Free Cash Flows ; Weighted Average Cost of Capital

D. Cost of equity ; Cost of debt

E. Cost of preferred stock ; Weighted Average Cost of Capital