If a Firm Finances with Equity Rather Than Debt, Net

question 16

Multiple Choice

If a firm finances with equity rather than debt, net income will be greater because

• A) equity financing almost always leads to better firm performance than debt financing.
• B) the terms of equity financing are more stable than the terms of debt financing.
• C) this impacts asset selection for the better.
• D) there is no interest expense.

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Definitions:

Intrasender Role Conflict

A situation where an individual receives conflicting messages or expectations from the same source.

Intersender Role Conflict

A type of role conflict that occurs when a person receives contradictory or incompatible expectations from two or more individuals.

Interrole Conflict

A situation where an individual faces incompatible demands from different roles they hold simultaneously.

Organizational Norms

The shared expectations and rules that guide the behavior of individuals within an organization.