1. Which of the following statements is true of capital structures around the world??
a. ?There have been no significant observed differences between the capital structures of U.S. corporations and their German and Japanese counterparts.
b. ?Different countries use essentially the same international accounting conventions with respect to reporting assets on a historical versus replacement cost basis.
c. ?An analysis of both bankruptcy and equity reporting costs leads to the conclusion that U.S. firms have more equity and less debt than firms in Japan and Germany.
d. ?Equity monitoring costs are higher in the United States than in Japan and Germany.
e. ?Debt monitoring costs are lower in the United States than in Japan and Germany.
2. A crossover bond is a bond that
A. was previously in default but is now current with its debt obligations.
B. was issued by a non-U.S. entity but is held by a U.S. party.
C. has both an investment-grade and a low-grade rating.
D. was issued as investment-grade but is currently rated as low-grade.
E. is rated by both a U.S. and a non-U.S. rating agency.