Which of the following statements is correct? a. if corporate tax rates were decreased while other things were held constant, and if the modigliani-miller tax-adjusted tradeoff theory of capital structure were correct, this would tend to cause corporations to decrease their use of debt. b. a change in the personal tax rate should not affect firms' capital structure decisions. c."business risk" is differentiated from "financial risk" by the fact that financial risk reflects only the use of debt, while business risk reflects both the use of debt and such factors as sales variability, cost variability, and operating leverage. d. the optimal capital structure is the one that simultaneously (1) maximizes the price of the firm's stock, (2) minimizes its wacc, and (3) maximizes its eps. e. if changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation.

Suppose the marginal damage and marginal benefit curves in a polluted neighborhood are md = p/3 and mb = 4 – p. also, suppose that transactions costs are low, so that the consumers and the firm can bargain. we saw that in this case, the socially-optimal level of pollution is achieved. start by computing the socially-optimal p. then, for each of the following cases, compute the amount of money transferred through the bargaining process, and indicate who pays whom (i.e., whether consumers pay the firm, or vice versa). also, compute the gains to each party relative to the status quo (i.e., the starting point of the bargaining process).a)consumers have the right to clean air; firm is dominant in the bargaining process.b)consumers have the right to clean air; consumers are dominant in the bargaining process.c)firm has the right to pollute; firm is dominant in the bargaining process.d)firm has the right to pollute; consumers are dominant in the bargaining proces