The capital asset pricing model was derived with simplified assumptions building on the original mean-variance optimizations analytics developed by ________

Which of the following statements is true?

A) A graph of the relationship between EPS and EBIT is steeper when the firm is leveraged. B) At the indifference point on an EPS-EBIT graph, two financing alternatives provide the same EBIT. C) Firms are more likely to use greater levels of debt when predicted EBIT is low. D) In EPS-EBIT analysis, EPS is considered a poor proxy for firm value. E) None of the above.

If bonds have been issued at a discount and the effective-interest method is used, ________ over the life of the bonds

A) carrying value of the bonds will decrease B) interest payment will increase C) interest expense will decrease D) interest expense will increase