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1)Which of the following statements is (are) correct? A) A large debt obligation limits management's ability to use corporate resources in ways that do not benefit investors

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1)Which of the following statements is (are) correct?
A) A large debt obligation limits management's ability to use corporate resources in
ways that do not benefit investors.
B) Managers will prefer less debt as it lowers the firm’s risk of missing interest payments and being forced into liquidation.
C) Both A and B are correct.
D) None of the above.

2)The capital market pricing model assumes that the markets are frictionless. This
implies that:
A) Assets are tradeable at any price and in any quantity and no individual can affect the price.
B) There are no restrictions on short-selling, or other regulations that would affect the
ability to transact.
C) Both A and B are correct.
D) None of the above.